Saturday, June 13, 2009
Bank Accounting Stinks
"The financial-services industry is taking steps to delay an accounting rule that would force banks and others to bring some of their off-balance-sheet vehicles back onto their books next year, which could force some to raise additional capital. ... The letter was signed by 16 industry associations, many of which were part of a group known as thwe 'Fair Value Coalition,' which was formed with the goal of changing mark-to-market accounting rules. ... Now the group of financial organizations is trying to put the brakes on the off-balance sheet accounting measure, which would force banks to bring hundreds of billions in assets back onto their balance sheets at the beginning of 2010, effectively forcing them to set aside more capital. Some accounting experts say they aren't surprised by the banking industry's latest effort. 'Here we go again. They will get out their checkbooks, and go to the Hill,' says Lynn Turner, the [SEC's] former chief accountant", Susan Pulliam at the WSJ, 4 June 2009.
This is a joke as is bank accounting. Where are the Big 87654 to scream about this? Or: FASB, OCC, SEC or PCAOB? Did the Fed's stress tests give effect to off balance sheet vehicles?