HUDSON CASTLE

NYT--It was like a hidden passage on Wall Street, a secret channel that enabled billions of dollars to flow from Lehman Brothers into a graveyard of financial horror. 

In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman scientist — to shift investments into the deal morgue for reanimation.

The firm, called Hudson Castle, played a crucial, behind-the-scenes role at Lehman, according to an internal Lehman document and interviews with former employees. The relationship raises new questions about the extent to which Lehman obscured its financial condition before it plunged into bankruptcy.

While Hudson Castle appeared to be an independent business, it was deeply entwined with Lehman. For years, its board was controlled by Lehman, which owned a quarter of the firm. It was also stocked with former Lehman employees.

None of this was disclosed by Lehman, however.

WB7: Banana capitalism never ceases to amaze.