This is PRECISELY WHY I repeatedly refer to our Financial CRISIS as GOVERNMENT ENABLED! Both the Federal Reserve and the U.S. Treasury Dept. have allowed the BANKSTERS to OPERATE under this DECEPTIVE ACCOUNTING practice!!! Causing their shareholders to be FOOLED and ultimately causing the COLLAPSE of our financial industry! Now the very same government arms are USING OUR TAXPAYER MONEY to clean up their mess! This change should be our government's #1 PRIORITY! Our government is STILL allowing the BANKSTERS to do BUSINESS AS USUAL! How do you expect us to have CONFIDENCE when our government keeps lying to us, the CEO's of the TOO BIG TO FAIL banks keep lying to us, and we don't get the FULL SCOPE of these PUBLIC TRADED corporation's liabilities when we look at their BALANCE SHEETS!
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The Washington Post
Board to Ban Accounting Practice That Helped Lending Proliferate
Rule Change Aimed at Preventing Another Financial Crisis
written by By Binyamin Appelbaum
Monday, May 18, 2009
The end is nearing for an accounting trick destined to be remembered as a hallmark of the housing boom, because it allowed financial firms to CONCEAL a vast expansion in their lending from regulators and investors.
Under this strategy, firms placed trillions of dollars in loans in the financial equivalent of self-storage facilities. They were not required to disclose the contents or maintain capital buffers against potential losses. By allowing firms to expand lending WITHOUT increasing capital, the practice increased profits. But it left firms ill-prepared to ABSORB LOSSES as defaults rose.
Now, as regulators move to prevent another financial crisis, the trick has become an early target. The Financial Accounting Standards Board, the nonprofit organization that sets bookkeeping rules for U.S. companies, is scheduled to vote this morning to prohibit the practice as of the beginning of next year.
"It was intended as a convenience, but it got stretched," said Marc A. Siegel, one of FASB's five members. "It got stretched to the point that we want to eliminate that loophole."
Citigroup reported that its Q's held more than $800 BILLION as of June. <<<=== [This is just one bank. Add up the rest of the TOO-BIG TO FAIL banks and we're somewhere in the TRILLIONS $$$ in losses.]
Board to Ban Accounting Practice That Helped Lending Proliferate
Rule Change Aimed at Preventing Another Financial Crisis
written by By Binyamin Appelbaum
Monday, May 18, 2009
The end is nearing for an accounting trick destined to be remembered as a hallmark of the housing boom, because it allowed financial firms to CONCEAL a vast expansion in their lending from regulators and investors.
Under this strategy, firms placed trillions of dollars in loans in the financial equivalent of self-storage facilities. They were not required to disclose the contents or maintain capital buffers against potential losses. By allowing firms to expand lending WITHOUT increasing capital, the practice increased profits. But it left firms ill-prepared to ABSORB LOSSES as defaults rose.
Now, as regulators move to prevent another financial crisis, the trick has become an early target. The Financial Accounting Standards Board, the nonprofit organization that sets bookkeeping rules for U.S. companies, is scheduled to vote this morning to prohibit the practice as of the beginning of next year.
"It was intended as a convenience, but it got stretched," said Marc A. Siegel, one of FASB's five members. "It got stretched to the point that we want to eliminate that loophole."
Citigroup reported that its Q's held more than $800 BILLION as of June. <<<=== [This is just one bank. Add up the rest of the TOO-BIG TO FAIL banks and we're somewhere in the TRILLIONS $$$ in losses.]
Many financial experts say this ability to obscure the details of these loans probably encouraged banks to take larger risks. Comptroller of the Currency John C. Dugan has said that banks applied less rigorous underwriting standards on loans sold to investors compared with the loans retained by the banks.
Outrage among investors reached a boiling point last year as banks announced BILLIONS of dollars of losses on holdings they had CONCEEALED from shareholders through use of these tools.
Siegel said the new attitude guiding this rule is to ensure that investors are not surprised by the details of banks' balance sheets.
"If it's going to cause a LIABILITY to the corporation, that should be REFLECTED," he said.
Please click HERE to read the entire article... MUST READ!!!
Outrage among investors reached a boiling point last year as banks announced BILLIONS of dollars of losses on holdings they had CONCEEALED from shareholders through use of these tools.
Siegel said the new attitude guiding this rule is to ensure that investors are not surprised by the details of banks' balance sheets.
"If it's going to cause a LIABILITY to the corporation, that should be REFLECTED," he said.
Please click HERE to read the entire article... MUST READ!!!
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