What does "risk wizard" mean? Is he like "Tommy's"pinball wizard, the "deaf, dumb and blind kid who sure plays a mean pinball"? The "accounting rationale" likely will be SFAS 5 about contingencies. I say crap, crap, CRAP and CRAP! As a senior accountant said to me when I was a junior at Big Eight, "that's a creatively revised accounting principle".
Citi can make a good faith case for not recording the SIVs on its balance sheet under SFAS 5; I see no basis not to disclose the contingent liability. KPMG should be put--sorry about that--out of business for this. Hey, KPMG New York (NY), my SFAS 5 copy includes paragraph 4 which lists guarantees, standby letters of credit and agreements to repurchase receivables as loss contingencies. I got it now. No one in KPMG NY has a complete copy of SFAS 5. Amazing.
Where's PCAOB? Did it start investigating KPMG's Citigroup audit? If not, why not? Is it too busy beating up miniscule CPA firms? What is very juicy in the 5 November disclosure is that our buddy, Hank Paulson suggested MLEC on 12 October, 24 days before Citigroup's public disclosure. Think about that. Where are the indictments? Where's the SEC?