The bankruptcy examiner's report on Lehman Brothers has just been filed in court, and the early accounts are quite eye-opening.  Lehman appears to have used accounting gimmicks to hide $50 billion in debt.  Even more interesting, according to Yves Smith (Naked Capitalism blog) there's substantial evidence that the NY Fed under Timothy Geithner helped cover this up.  How much similar fraud has been hidden in other "too big to fail" (TBTF) banks is unknown.  A reasonable guess is that there's a lot.  
 
There have been rumors that Geithner might be on the way out.  Let's hope these revelations seal that, and that someone serious and clean gets the position.  By "serious" I mean someone who understands the financial system, and the crookedness that seems to pervade these TBTF banks.  By "clean" I mean someone who is not beholden to them.  I can think of numerous candidates, and some may well be realistic.  Personally, I would like to turn William Black loose on Wall Street finance.  I doubt he's be a candidate for Treasury Secretary, but a new Treasury Secretary ought to appoint him as a special investigator.
 
If the federal government does not clean up the corruption in the highest levels of finance, and within its own agencies, I don't think America has much of much of a future as a free country.  Secure private property rights are an absolutely necessary foundation for a free market, and a free market is an absolutely necessary foundation of a free and prosperous country.  This is isn't some ideological pronouncement, but a thoroughly practical point of economics.  Complex market trading is necessary to reap the gains from entrepreneurship and division of labor.  Endemic corruption brings insecure rights and fraudulent accounting; as a result, economic activity turns from production of wealth to hiding and stealing it. This poisons the social relations.  I observed this kind of thing firsthand in the former Soviet Union (Russia and Ukraine), and it is ugly, vicious, and depressing.
 
Mr. Obama is a very weak reed to hang our hopes on.  But neither the Democrats nor Republicans in Congress seem very serious about tackling these issues; they are not exactly clean themselves.  Our president is floundering badly, and seems unable to do anything other than deliver campaign-style speeches.  But maybe he's starting to realize he's been sold a bill of goods by his economic advisors.  If he wants so badly to be president, why doesn't he start acting like a president: he should fire Geithner (and have him investigated for possible criminal infractions) and replace him with Paul Volcker, fire Bernanke and replace him with Tom Hoenig of the KC Fed, and put William Black in charge of a task force designed to clean up financial corruption.
 
My guess is that the Lehman scandal has only begun.  Mr. Obama ought to drop his ill-conceived and unpopular health care reform agenda and tackle something that is crucial and doable, and that would be very popular with voters across the spectrum: clean up the corrupt Wall Street-Treasury-Fed triangle.