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?


svend said...

I really enjoy your site. Thanks for your hard work.

Could you please provide links to the stories you cite? I have a hard time reading the format you use.

Thanks kindly, again.

Anonymous said...

Two words. Shadow banking.

Dark, corrupt capital structures, mispriced risk, accounting arbitrage, excessive liquidity from the Fed = global meltdown.

They got what they wanted on mark-to-market... opacity...

The banks are insatiable.

Jr Deputy Accountant said...

WHAT? You mean FAS 157-e wasn't enough?

did you see the Fed's official thoughts on this? They are encouraging FAS 167 among others. HUH? I'm confused.

why would they encourage this?


Independent Accountant said...

I do when they are readily available.


Svend said...

Cheers, thanks.

Again, I really enjoy your work. Thanks. I'm halfway through my MAcc and wondering what the hell kind of corrupt industry I've gotten myself into.

As a side, how mobile is a CPA? Is it possible to find good employment in Asia etc? I'm just about done with the USA.

Independent Accountant said...

Thanks. I have bad news for you. The CPA industry is no more or less corrupt than any other. The difference between the CPA industy and others is hypocrisy. If you don't, follow Francine McKenna's blog, re: The Auditors for an eyeful. To discuss your potential career moves, send me an e-mail. Blog comments are not an appropriate forum for that.