The Wall Street Journal continues its excellent work on the Wall Street “window dressing” story, which it broke early last month.

Michael Rapoport and Tom McGinty find that Bank of America, Citigroup, and Deutsche Bank—too big to fail goliaths all—have systematically lowered their debt levels before quarterly reporting periods in order to obscure how much they have.

Over the past 10 quarters, the three banks have lowered their net borrowings in the “repurchase,” or repo, market by an average of 41% at the ends of the quarters, compared with their average net repo borrowings for the entire quarter, according to an analysis of Federal Reserve data. Once a new quarter begins, they boost those levels.

The difference between this story and the first one is that the Journal actually zeroes in on eight big banks and their borrowing levels. The original calculated an average of eighteen banks to show how the biggest ones were reducing their debt at quarter’s end and raising it again once the new period began. Both of them are enterprise stories dug out by reporters doing the numbers themselves.

This is good context:

Intentionally masking debt to deceive investors violates Securities and Exchange Commission guidelines. Before sliding into bankruptcy in 2008, Lehman Brothers Holdings Inc. reduced its reported quarter-end borrowing by classifying repo loans as sales, a bankruptcy examiner found—creating what the examiner said was a “materially misleading” picture of Lehman’s financial condition.

Other banks have denied using the same kind of transaction, which Lehman dubbed “Repo 105s.”

The WSJ clears Goldman Sachs, JPMorgan Chase, and Morgan Stanley, saying they “haven’t regularly lowered their quarter-end borrowing.” Of the three it focuses on, Citigroup does the most futzing around, but Bank of America has had some wild swings, too:

During the first quarter of 2010, Bank of America’s average net repo debt rose to an average $130.1 billion, then dropped 61%, to $50.6 billion, at the end of the same quarter.

One thing that’s not clear to me from this piece is just how much these moves reduce the banks’ overall debt levels and leverage ratios. The piece is vague on the latter here:

The banks’ overall “leverage”—that is, their use of borrowed funds to boost returns—frequently has declined at the end of quarterly periods as well, the analysis shows.

But it’s still good work.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.