On Monday we wrote about allegations that Bank of America had engaged in manipulation of its balance sheet using tactics akin to Lehman Brothers' "Repo 105." (Repo 105, as the Wall Street Journal puts it, is a "more-than-questionable interpretation of accounting rules" that enabled the bank to hide its risks before its eventual bankruptcy.)
I'd put in several calls and e-mails with Bank of America both Monday and today asking for a response to the allegations. The bank's rep said he wanted to be thoughtful about the response, and this afternoon, sent me this carefully crafted statement:
"Efforts to manage the size of our balance sheet are routine and appropriate, and we believe our actions are consistent with all applicable accounting and legal requirements."
My only thought is that this is very similar to what Lehman's auditors, Ernst & Young, said in response to criticism about their review of Lehman's accounting, right after Repo 105 hit the news earlier this month. Here's what the auditor's spokesman, Charles Perkins, said at the time:
"Our opinion indicated that Lehman's financial statements for that year were fairly presented in accordance with Generally Accepted Accounting Principles, and we remain of that view."