In March, I asked Bank of America about allegations that it was manipulating its balance sheet using tactics akin to Lehman Brothers’ “Repo 105” -- an accounting maneuver that Lehman had used to move assets off its balance sheet and hide its risks. We'd had questions for BofA after financial blogger John Hempton took a closer look at the bank's annual reports and noted that BofA's end-of-quarter assets were consistently lower than its average assets throughout the quarter. (Here’s a Repo 105 refresher.)

When I contacted it at the time, Bank of America didn't deny that it moved assets around, and instead said it followed the law and accounting standards:

Efforts to manage the size of our balance sheet are routine and appropriate, and we believe our actions are consistent with all applicable accounting and legal requirements.

So I was interested to read this Wall Street Journal Page 1 headline over the weekend: “BofA Admits Hiding Debt.”

In recent letters sent to the SEC, Bank of America “admitted to making six transactions that incorrectly hid from view billions of dollars of debt,” reported the Journal. The transactions—made between 2007 and 2009--involved as much as $10.7 billion, less than to the $50 billion that Lehman hid before declaring bankruptcy in 2008. (Read Bank of America's letters from April 14 and May 13.)

According to BofA, its error was in booking these six “repos,” or short-term borrowing, as sales. Doing so moved debt off its balance sheet, making the company’s profile look better to investors. This is also what happened when Lehman booked its Repo 105 transactions as sales instead of borrowing.

The Journal points out that such end-of-quarter “window dressing isn’t illegal in itself,” but “intentionally masking debt to deceive investors” is a violation of regulatory guidelines. (It’s also worth pointing out that former Lehman officials are in some legal trouble over Repo 105, and Lehman’s auditor, Ernst & Young, is being investigated in the U.K.)

A BofA spokesman told me today the bank still stands by the statement it gave us back in March. How is it that the bank can say it believes its "actions are consistent with all applicable accounting and legal requirements" while also admitting accounting errors to the SEC?

You can judge for yourself: The initial statement, which the bank continues to stand by, is quite broad. It seems to acknowledge moving assets around--thus "efforts to manage the size of our balance sheet"--but denied that any of those management techniques broke laws or accounting rules. BofA reiterated almost the exact same language in its April 14 letter to the SEC: "We believe that our efforts to manage the size of our balance sheet are appropriate and our policies are consistent with all applicable accounting and legal requirements." But in its May 13 letter to the SEC, Bank of America stated: "Although the accounting guidance is subject to interpretation, we concluded that, based on the intent and lack of economic substance, sale accounting was not appropriate for these transactions."

Bank of America also said that the mistake was not material to its earnings and balance sheet. (Lehman executives have also said that Repo 105 wasn’t used to create a “false impression” to mislead investors.)

When I spoke today with Bank of America spokesman Jerry Dubrowski, he argued that there was a "profound difference" between what Lehman Brothers did and what Bank of America did -- the difference being intentionality, levels of disclosure, and the size of the transactions:

We found no evidence of Repo 105 transactions. We did find a handful of transactions, relatively small in nature when compared to our balance sheet, were accounted as sales and should’ve been accounted as borrowings. The issue of Repo 105 was a deliberate attempt to mask size of balance sheet from investors. [Dubrowski later clarified that this is how Lehman was described in the Lehman Brothers bankruptcy examiner's report, and not a Bank of America characterization of Repo 105.] There’s a profound difference between what Lehman did and Bank of America discovered when we looked at those transactions. Lehman did not report average assets over the period, and Bank of America did, so investors could compare average assets to end-of-quarter assets. Lehman moved I think it was $50 billion off a balance sheet that was significantly smaller than Bank of America’s. You’re talking about magnitude.

The bank's new disclosures about these six transactions--what it has called "dollar roll" transactions--came in response to a March 29 letter from the Securities and Exchange Commission. The agency's letter came a few weeks after the examiner's stunning report on Lehman, and if you're keeping count, a week after our post. According to the Journal, the SEC has been investigating the transactions since then and could be releasing these findings as early as this week. The Journal says the SEC “hasn’t taken any action against BofA over the matter," and "the fact that the letter was released suggests the SEC has concluded its review."

Bank of America said in its letters to the SEC that it hasn’t done these types of transactions since early 2009, and said it has told its staff to “‘escalate’ consideration of any unusual balance-sheet changes.”