But when Lehman Brothers wanted to make it look like it wasn't borrowing so much money, the company used a special technique to get around this rule. It did repo deals where it took slightly less cash than the asset was worth.
For example: If Lehman owned a bond that was worth $105, it would "sell" it on the repo market for $100. (The "105" in Repo 105 refers to the fact that the assets were worth at least 105% of what Lehman was getting for them.)
This gap allowed the company to record the transaction as if it had been a true sale of the bond -- despite the fact that, under the agreement, the company would repurchase the bond just a week or so after it had sold it.
Lehman would take the money it got from selling the bond and pay off some of its debts. Then, after it had issued its quarterly report, the company would borrow more money to repurchase the bond.
Lehman went big on this technique: In the second quarter of 2008 it used Repo 105 to move $50 billion off of its balance sheet, according to the Examiner's report.