Lehman repackaged a bunch of risky LBO loans into an entity called
Freedom (make your own snide remarks about the name) which then issued
bonds of its own, conveniently rated A by the usual suspects. Lehman
then took those new bonds to the bend-over-backwards-to-oblige Fed as
collateral and...presto: cash. Feel free to bulge your eyes in
incredulity and scream, if it helps.
http://www.reuters.com/article/ousiv/idUSN1139492520080411
