Jim Chanos Says Lehman Committed Financial Fraud

Posted By on April 20, 2010

Jim Chanos, hedge fund manager and president of Kynikos Associates, sat down with FOX Business Network’s Charlie Gasparino and Brian Sullivan to talk Lehman Brothers (LEHMQ) investigation, Goldman Sachs (GS) vs SEC, predicting financial scandals and China.

 

Apr 20, 2010 

Courtesy of Fox Business Network

On whether Lehman was a criminal fraud:

“I think it was. I think there were a number of criminal frauds that haven’t been prosecuted. I’m not going to name names, I just think anyone signing the financial statements who were CEOs and CFOs of these firms ought to be hiring criminal attorneys. Anybody who is lying to the public and their shareholders by saying one thing and doing clearly something else is committing fraud.

“We have had kid gloves in this cycle and in this crisis in going after people and I’m still puzzled as to why.

On Goldman Sachs:

“We do business with Goldman and we don’t short anybody we do business with.

On predicting future financial frauds and scandals:

“There is some big picture stuff that worries us. Congress is like the French General staff in the 20th century. What we need to do is look ahead. They are talking about staffing the same people that didn’t see it the last go round. I worry that we are going to get a false sense of confidence on that.

“What keeps me up at night clearly is the state of state and local finances. Municipal and State debt is going to be a big problem going forward. The numbers just don’t work. The demographic bulge is hitting that. You’ve got California, New York New Jersey. It’s going to be a tough issue. The fuse has been lit on the demographic time bombs for state and local governments.

On whether he shorts the United States Treasury Bond:

“Compared to what? That’s the problem. The problem is when you go short a government you have to, in effect, to do it another currency. I wouldn’t want to own thirty or ten year paper for my own account or my retirement account or any accounts I advise.

“Every time we seem to be on the brink of a deflationary event, it’s very clear that the Fed errs on the side of excess money creation.

On the Volcker rule:

“I think it’s going to make it.

On China:

“China is in the midst of a world class property boom. It is leading to the economic growth we are seeing. Almost half of their GDP is coming from that.

http://wallstreetpit.com/23957-jim-chanos-says-lehman-committed-financial-fraud

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