Lehman Brothers, Enron and the Accountants

You might remember that following the collapse of Enron, it was discovered that Enron was loaning money to itself and treating the loans as sales, a little bit of accounting legerdemain that also resulted in the implosion of the accounting firm of Arthur Andersen.

Now it has come to light that Lehman Brothers was doing the exact same trick, only with the help of the accounting firm of Ernst & Young, only this time. Lehman couldn't find an American law firm to approve this bit of bookkeeping fraud. They had to go to England.

So, when will we be smart enough to realize that what we need are good regulations with regulators who are alert and awake, not asleep at the switch like the SEC was? Though, in the only defense possible of the SEC, it was clear to everyone that the SEC was doing exactly what the Bush Administration wanted them to do: They saw nothing, they heard nothing, and they knew nothing.

At what point do we stop only looking for things like this with financial coroners and start trying to catch these thieves in the act?

And at what point does the government stop colluding in funny bookkeeping, as the New York branch of the Federal Reserve was doing? (The head of the NY Fed was some clown named Geithner, too bad the reporters can't seem to find him to ask what he knew.)