As John Hempton pointed out last week, Lehman wasn't the only bank that engaged in bogus end-of-quarter balance sheet manipulation to trick investors into thinking it was less leveraged than it was.
Turns out, Bank of America (BAC) did it, too.
Hempton compared Bank of America's "average quarterly assets" and "end of quarter assets" and found that, in each quarter, billions of dollars of assets conveniently disappeared briefly at the end of the quarter, only to return again at the start of the next one.
Thus, Bank of America interrupted its wild gambling for a few days at the end of the quarter, presented a sober snapshot to its investors, and then went right back to gambling again.
Was this illegal?
Probably not. Like Lehman, Bank of America probably found some legal loophole in some country somewhere that allowed them to momentarily hide tens of billions of dollars of assets somewhere where Wall Street wouldn't see them.
But it's certainly not transparent and forthright, either.
Anyway, ProPublica caught up with Bank of America and asked them to comment on this behavior. Naturally, Bank of America thinks it's perfectly acceptable:
"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."
Mm hmm. As ProPublica notes, this is almost exactly what Ernst & Young said about its Lehman accounting:
"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."