Ex-SD: From the article: "It's not surprising that lenders were fooled when every level of the real estate transaction was compromised like it was here," the prosecutor said. "These lenders did due diligence and did push back sometimes. At a certain point, lenders rely on the honor process."
You are lending someone nearly $1.5MM, and you rely on the honor process? Even the most cursory examination of the loan application and documents, followed by verification, would have shown the underlying fraud.
$142MM in bad loans. I don't mean to sound callous, but please. You are lending this money, and are therefore responsible for the diligence process. What does Lehman expect to get back here? The article states that money is long gone, spent on vintage wines and chartered flights. They'll be lucky to collect pennies on the dollar.
I'd love to read the letter Lehman puts out to their shareholders on this one.
