Archive for the ‘accounting’ Category
Thursday, June 4th, 2009
After lobbying successfully to defeat mark-to-market accounting rules, the big banks have organized themselves to beat back another FASB-proposed accounting change. This one would force them to bring off balance sheet assets back onto the balance sheet in 2010. WSJ:
A group that includes the Chamber of Commerce, the Mortgage Bankers ...
Posted in accounting, leverage, Wall Street | 3 Comments »
Tuesday, May 19th, 2009
Edmund Andrews' Sunday confession in the NYT ended with the following line:
Eight months after my last payment to the bank, I am still waiting for the ax to fall.
The man spends a couple thousands words chronicling his personal credit crisis, how debts have tormented him and nearly ruined his marriage, ...
Posted in accounting, housing | 16 Comments »
Saturday, May 16th, 2009
"You're only cheating yourself...."
There's a reason society teaches children not to cut corners. Cheating purchases short term gains at the expense of long-term losses. The same could be said of regulatory capital standards. Regulators and accounting rulemakers are conspiring to let banks overstate their capital positions in order to ...
Posted in accounting, GSE, treasury | 6 Comments »
Friday, May 15th, 2009
Guaranty Financial should be included in OA's "bank death watch." With $15 billion in assets and $11.6 billion in deposits as of 12/31, Guaranty Bank would be the largest bank failure in 2009.* Reader Andrew tipped us off to their second "notification of late filing" regarding Q1 financials. Like BankUnited, ...
Posted in accounting, bailout, banking, Wall Street | 3 Comments »
Wednesday, May 13th, 2009
John Gavin of Disclosure Insight forwards this video of his appearance on CNBC. In it, he questions the integrity of the stress tests.
Gavin published a report on bank goodwill that we featured here on OA: "Using goodwill as a proxy for overall balance sheet integrity, we found reason to question ...
Posted in accounting, banking, politics, Wall Street | No Comments »
Tuesday, April 14th, 2009
Lots of interesting things to report regarding Goldman Sachs today.
In this post: accounting gimmickry, higher leverage (tangible assets/tangible common equity calculated below), and silence regarding AIG payments.
In the next post: Goldman raises $5 billion in a sale of stock, which is good news.
Accounting Gimmicks and Tangible Common Equity
With respect to ...
Posted in accounting, banking, leverage, stocks, Wall Street | 6 Comments »
Thursday, April 9th, 2009
Black is emerging as a major force for good, using terms like "fraud" that most aren't willing to utter. The interviewer asks good questions you don't typically hear from not-so-well-educated CNBC hosts.
Posted in accounting, banking | 1 Comment »
Saturday, April 4th, 2009
According to Bloomberg, now that U.S. banks can fudge their marks, the Europeans are worried their banks will be at a disadvantage. So they're in a rush to lower their own accounting standards.
The quotes in this article are pure gold. Highly suitable for framing. But first the basics:
European lenders may ...
Posted in accounting, banking | 1 Comment »
Sunday, March 29th, 2009
John Gavin of Disclosure Insight has written a letter to FASB opposing its proposal to refine mark-to-market rules. Like John, I hope FASB sees the light.
It has been said that changing MTM rules would be like giving inmates keys to their own prison. Seems to me banks already have keys---to ...
Posted in accounting, banking | 9 Comments »
Thursday, March 12th, 2009
Marketwatch has the story.
The Republican Study Committee, a group of conservative GOP lawmakers, believe that instead of pumping billions to bail out banks, lawmakers could save the economy by simply eliminating controversial mark-to-market accounting rules, which require daily revaluing of assets...
The first step is a hearing Thursday, hosted by House ...
Posted in accounting, banking, credit crunch, debt, leverage | 5 Comments »
Tuesday, March 10th, 2009
[Update: Sure enough, political consensus now appears to be in favor of MTM changes. More here]
No wonder financials soared yesterday; Bernanke suggested mark-to-market accounting needs adjusting. That would allow banks to avoid writing down toxic assets, artificially inflating their equity value.
CNN Money quoted Fed Chairman Bernanke saying he wouldn't support ...
Posted in accounting, banking, credit crunch, debt, Economy, Fed | 13 Comments »
Thursday, February 26th, 2009
So much for the CBO's estimate of $1.3 trillion for this year's estimate. Including the stimulus bill and Obama's new budget, the deficit is not projected to be much higher (Reuters)
President Barack Obama will forecast the biggest U.S. deficit since World War Two in a budget on Thursday that urges ...
Posted in accounting, debt, Economy, taxpayer issues | 2 Comments »
Wednesday, February 25th, 2009
Two weeks ago I wrote "With Allstate You're Not in Good Hands." The company had convinced regulators to change capital adequacy requirements to allow, among other things, the inclusion of deferred tax assets as regulatory capital. I did some digging and, sure enough, Allstate's story is not unusual. Lincoln National ...
Posted in accounting, Fed, leverage, shorts | 11 Comments »
Saturday, February 21st, 2009
Three weeks ago, the positively schizophrenic Op-Ed page for the WSJ published yet another piece by a big financial brain proposing a "solution" to the financial crisis. While the editorial page itself is so rigidly ideological as to be useless, the op-ed page publishes stuff all over the map. The ...
Posted in accounting, credit crunch, debt, deflation, Economy | 17 Comments »
Sunday, February 8th, 2009
Is the insurance industry going to follow the banking industry into oblivion? Reader Marty passed on two fantastic Washington Post (WaPo) articles from this past week about how insurance companies are shopping state regulators for more lenient capital adequacy requirements. And getting what they want. The lead from the first ...
Posted in accounting | 11 Comments »
Thursday, February 5th, 2009
As I noted in my post on The Paradox of Gluttony, PIMCO's Bill Gross---the world's largest bond fund manager---has emerged as the investment community's loudest proponent of government intervention to support asset prices. Naturally, he's also in favor of shock-&-awe stimulus (Bloomberg):
“This economy needs support from the government, a check ...
Posted in accounting, bailout, bankruptcy, government spending, taxpayer issues | 2 Comments »
Sunday, January 11th, 2009
Citi's pending sale of Smith Barney will result in a nice accounting write-UP. Bloomberg:
Citigroup Inc. may book a gain of as much as $10 billion by forming a brokerage venture with Morgan Stanley, helping to replenish capital depleted by the biggest losses in the bank’s 197-year history, a person familiar ...
Posted in accounting, banking, Wall Street | 1 Comment »
Friday, January 9th, 2009
Citigroup director Bob Rubin announced his resignation today. One of the primary architects of the current financial crisis, he will not be missed. Rubin was among those in the Clinton administration that made Citigroup possible. The bloated financial "supermarket" was the result of a merger between Traveler's and Citicorp. That ...
Posted in accounting, banking, stocks | 8 Comments »
Sunday, December 28th, 2008
Finally, a good article in the NYT's series "The Reckoning." Past articles in this series have been weak, as Yves noted over at Naked Capitalism. Besides the two pieces she cogently criticized, I was unimpressed with the story on Herb and Marian Sandler, the inventors of the option ARM. I ...
Posted in accounting, banking, housing | 2 Comments »
Thursday, December 18th, 2008
One question regular folks consistently ask about the housing bubble/financial crisis: Why did it go on so long? Why were bankers putting risky borrowers into toxic mortgage products almost engineered to blow up?
One answer is that no one saw it coming. "Hoocoodanode?" says CR. "Who coulda known?" That's part of ...
Posted in accounting, banking, bubble, housing | 4 Comments »
Tuesday, December 16th, 2008
Investors will have to keep waiting for BankUnited to publish its latest financials. Today Florida's largest regional bank, an option ARM specialist, released a "non-timely filing notice," noting that they will be unable to make their annual filing with the SEC by the Dec. 15th deadline.
The filing includes a "going ...
Posted in accounting, banking, bankruptcy, stocks | 4 Comments »
Wednesday, December 10th, 2008
Defending Fannie and Freddie, Paul Krugman posted "Fannie Freddie Phony" a month ago:
...Fannie/Freddie did some bad things, and did, it turns out, get to some extent into subprime. But thanks to the accounting scandals, they were actually withdrawing from the market during the height of the housing bubble — the ...
Posted in accounting, GSE, politics | 12 Comments »
Friday, December 5th, 2008
Here's a good link for folks still struggling to understand Credit Default Swaps and how they brought the world financial system to its knees (hat tip: Patrick). It tells the story of CDS in allegory. A snippet:
...What a disaster this was. What a mess! What had begun so innocently and ...
Posted in accounting, bailout, banking, bankruptcy, credit crunch, credit default swaps, politics, taxpayer issues, Wall Street | 6 Comments »
Tuesday, December 2nd, 2008
If you want to understand de-leveraging, you could do worse than Meredith Whitney's op-ed in yesterday's Financial Times. She noted that $3 trillion of credit had been "expunged" from the economy so far this year. She also said credit card lines could be substantially reduced:
I estimate that the mortgage market ...
Posted in accounting, bailout, banking, credit crunch, Economy, taxpayer issues | 18 Comments »
Monday, November 24th, 2008
(Here are part 1 & part 2 in case you missed them)
Why am I excluding preferred capital? A great question from reader Mark. GE and GS are both on my leverage chart, and not only an I excluding the preferred capital they raised from Buffett, I'm excluding the TARP capital ...
Posted in accounting, bailout, banking, credit crunch, government spending, stocks, Wall Street | 5 Comments »
