Bloomberg writes "Banks May Be Using Lehman-Style Trick to Disguise Debt." The article explains, "Banks may be disguising their borrowings in a way similar to that used by Lehman Brothers Holdings Inc., with debt ratios falling within limits imposed by regulators just four times a year. Lenders use repurchase agreements -- known as repos -- to massage down their assets as reporting dates approach, typically as quarters end, the Bank for International Settlements said in its Annual Economic Report. The practice boosts leverage ratios -- the ratio between capital and so-called leverage exposures -- allowing banks to report them as being in line with regulatory requirements, it said. 'The data indicate that window-dressing in repo markets is material,' BIS analysts said in the report. 'Data from U.S. money market mutual funds point to pronounced cyclical patterns in banks' U.S. dollar repo borrowing, especially for jurisdictions with leverage ratio reporting based on quarter-end figures.'" The piece adds, "Banks' ability to engage in this kind of window-dressing depends on the jurisdiction they are in, the BIS said. That's because while countries including the U.S. and U.K. require lenders to report their leverage ratios based on daily averages over the period, others including France, Germany and Switzerland use end-period reporting."

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