Thursday, April 29, 2010

What New Rule?

"Discover Financial Services Inc. will implement a new accounting rule requiring companies to bring their off-the-books securitized loans onto their balance sheet in fiscal 2010. The rule would result in a $1.3 billion after-tax charge to equity in the first quarter, the company said in December. As a result of this change, Discover will bring on its books $21 billion of assets and increase reserves by $2.1 billion. ... In a report published Friday, analysts at Barclays Capital said, 'We believe the reserve build is one-time in nature and could lead to more rapid earnings improvement in subsequent quarters as the company front-loads reserves'," Aparajita Saha-Bubna at the WSJ, 15 March 2010, link:

What new rule? Likely Discover kept these assets off its books by misapplying existing rules. See my 6 February 2008 post:

1 comment:

Anonymous said...

Assets here... assets there...lalalala!

I got a bunch of fancy attorneys and I'm a gonna find me a way to do whatever I want...

Paper over the mess guys.