The House Financial Services Committee plans to probe the regulatory failures that led up to the collapse of Lehman Brothers after a bankruptcy examiner released a damning report last week on the investment bank’s accounting manipulations.

The report, by Jenner & Block chairman Anton Valukas, detailed Lehman’s abuse of “repo transactions” to shift $50 billion worth of assets off its balance sheet at the end of the first and second quarters of 2008 in order to report far less debt than it actually had, while claiming the transactions as sales rather than financings. Valukas found that the SEC did not force Lehman to change the way it accounted for its liquidity pool, which Lehman claimed was far larger than SEC regulators believed it to be. Many of the assets were not readily convertible to cash or had already been pledged as collateral to clearing firms.

At a hearing Wednesday of the House Appropriations Subcommittee on Financial Services, SEC Chairman Mary Schapiro admitted that her agency’s oversight of Lehman had been “terribly flawed in design and execution.”

One member of the committee blasted the regulatory failures. “Either the SEC and the New York Federal Reserve failed to discover the ongoing accounting fraud at Lehman, or they turned a blind eye,” said Spencer Bachus, R-Ala., according to “In either case, the actions of these two regulators represent a grave failure and should be explored at a public hearing.”

Bachus and another representative on the Financial Services Committee, Mary Kilroy, D-Ohio, requested the committee to hold a separate hearing on the bankruptcy examiner’s report on Lehman. Bachus wants to hear testimony from Treasury Secretary Timothy Geithner, the former head of the New York Federal Reserve; as well former Lehman CEO Richard Fuld, and former SEC Chairman Christopher Cox. House Financial Services Committee Chairman Barney Frank, D-Mass., has agreed to hold the hearing.