Sunday, October 25, 2009
Newsflash, Moody's Does Something
"Spanish banks are failing to recognize the true scale of their losses during the deep slump in Europe's fifth-largest economy--something that could hamstring the sector's growth for years, Moody's Investors Service said Tuesday. ... Moody's said the banks set aside less than half the Euro108 billion ($160 billion) in loan losses it estimates they will suffer during the course of the downturn. ... Spanish banks deny they are concealing any losses. A spokeswoman for Spain's banking association said its members, which include Spain's listed banks, continued to report strong earnings and had moved to bolster their capital. She added that the Bank of Spain [BOS] had performed stress tests on the banks and hadn't detected any irregularities. An official at the [BOS] said the Spanish regulator 'certainly doesn't allow banks to hide any losses, and will continue to act with rigor'," Thomas Catan & Christopher Bjork at the WSJ, 14 October 2009, link: http://online.wsj.com/article/SB125545053140882671.html.
I'm sure the BOS cleared its stress test protocol with Zimbabwe Ben before applying it. I wonder if Moody's contacted the various banks CPAs about its findings.