Today, starting at 11 pm, the House Financial Services Committee will begin hearings on the collapse of Lehman Brothers and its role in the financial crisis. The hearing will be broadcast live on C-SPAN 3.

Expected to testify: a who’s who of the world of financial regulation. Former chief executive of Lehman Brothers, Dick Fuld, Treasury Secretary Tim Geithner, Securities and Exchange Commission Chair Mary Schapiro, and Federal Reserve Chairman Ben Bernanke are all expected to testify before the committee.

FDL will be monitoring the hearing and will report on and/or begin liveblogging the hearing if something of note happens.

[Ed Note: A liveblog by any other name. . . Scarecrow is doing a great job of keeping up with all the action in the comments below.]

I don’t know how you keep hearing these stories of fraud – accounting fraud, investor fraud, what have you – without the Justice Department getting involved. We want to make banking boring again, and the simplest way to do that is by making absolutely clear that anyone who takes these kinds of risks and plays these kinds of games will go to jail for a long time. If we had a culture of accountability in Washington that would already be happening.

The report of the Examiner in the Lehman Brothers bankruptcy case explains how the company used accounting tricks to hide its financial position, and how the accountants went along. No system will work if managers and professionals can play games with regulations and avoid personal liability.

Well, this is EXACTLY WHAT PEOPLE WHO FAVOR REGULATING BANK SIZE HAVE BEEN SAYING. The non-financial bloggers in the wonkosphere seem to be constructing the mother of all straw men, arguing that those who want to break up the banks think that alone can solve the systemic problems at the root of the financial sector. Nobody I’ve read has been saying that. They all favor a both/and approach, including things like, well, derivative reform, and stronger regulations on shadow banking, and ending the accounting tricks, and even leverage and capital requirements. I don’t see the two sides in this debate at all in disagreement, other than what reforms they choose to emphasize. But there’s sure a lot of misunderstanding and misinterpreting at work. Maybe it’s because those making these arguments know them to be theoretical, as the likely outcome will probably be pathetic on all counts, with Democrats happier to get a “win” than anything fundamentally shaking up the system. Maybe everyone’s staking out higher ground.

You can tell that financial reform will be the next heavy lift in Washington because everyone’s chattering about it today, and proposing a variety of solutions. But they actually come down to something a lot simpler than what’s being proposed: regulators need a few clear rules, and they need to do their jobs.

Quite a few observers, including this blogger, have been stunned and frustrated at the refusal to investigate what was almost certain accounting fraud at Lehman. Despite the bankruptcy administrator’s effort to blame the gaping hole in Lehman’s balance sheet on its disorderly collapse, the idea that the firm, which was by its own accounts solvent, would suddenly spring a roughly $130+ billion hole in its $660 balance sheet, is simply implausible on its face. Indeed, it was such common knowledge in the Lehman flailing about period that Lehman’s accounts were sus that Hank Paulson’s recent book mentions repeatedly that Lehman’s valuations were phony as if it were no big deal.

Well, it is folks, as a [pdf] newly-released examiner’s report by Anton Valukas in connection with the Lehman bankruptcy makes clear. The unraveling isn’t merely implicating Fuld and his recent succession of CFOs, or its accounting firm, Ernst & Young, as might be expected. It also emerges that the NY Fed, and thus Timothy Geithner, were at a minimum massively derelict in the performance of their duties, and may well be culpable in aiding and abetting Lehman in accounting fraud and Sarbox violations.

The fallout from Lehman Brothers continues. Fannie Mae and Freddie Mac are exposed.

For most of us (John McCain excepted), the collapse of Lehman Brothers, Fannie Mae, Freddie Mac, Bear Stearns, Merrill Lynch, AIG (and others no doubt yet to come), is a clear sign something major has gone wrong with our financial system.

One of the main culprits in this debacle is the deregulation of the financial industry—which happened in large part through the efforts of McCain economic adviser Phil Gramm, who as senator, pushed through legislation allowing institutions to combine commercial banking and investment services.