Wednesday, December 09, 2009

At least then they won't have to pretend their figures are accurate.

Basically, the meeting will go like this: OK, big bank CEOs, everybody who wants to drop actual accountability from your financial statements, raise your hands. Great! It's unanimous. No one will ever be able to correctly assess a bank's financial statements again. Meeting adjourned.

New York Times Online
Board to Propose More Flexible Accounting Rules for Banks
By FLOYD NORRIS
Published: December 7, 2009

Facing political pressure to abandon “fair value” accounting for banks, the chairman of the board that sets American accounting standards will call Tuesday for the “decoupling” of bank capital rules from normal accounting standards...

Decoupling means just what you think it does - if this passes, they will get to ignore the accounting standards that every honest business has to use and make up their own standards, to obfuscate their true financial condition.

...In the prepared text of a speech planned for a conference in Washington, Robert H. Herz, the chairman of the Financial Accounting Standards Board, called on bank regulators to use their own judgment in allowing banks to move away from Generally Accepted Accounting Principles, or GAAP, which his board sets.

...He paraphrased Barney Frank, the chairman of the House committee, as saying that “accounting principles should not be viewed to be so immutable that their impact on policy should not be considered. I agree with that, and I think the chairman would also agree that accounting standards should not be so malleable that they fail to meet their objective of helping to properly inform investors and markets or that they should be purposefully designed to try to dampen business, market, and economic cycles. That’s not their role.”


Really? Considering their statements are so fudged that they clearly fail to meet that low-ball standard already, they're suggesting standards can go lowers still? How much lower - underground? That seems to be the gist of what they're proposing.

...Banks have argued that accounting rules made the financial crisis worse by forcing them to acknowledge losses based on market values that may never be realized, if market values recover.

So, we should fudge bank financial figures more because maybe a decade or two from now the housing market might recover - with wage stagnation still blowing full steam ahead and everyone acknowledging that those who lost their jobs will likely NEVER get comparable paying jobs back? Well, good luck with that, but I think that financial statements should reflect CURRENT reality, not some future fantasy land.

...Banking regulators already have capital rules that differ from accounting rules, but have not been eager to expand those differences. One area where a difference may soon be made is in the treatment of off-balance sheet items that the accounting board is forcing banks to bring back onto their balance sheets. The banks have asked regulators to phase in that change over several years, to slow the impact on their capital needs.

Because everybody would faint in the floor if they saw the true figures all at once right now.

Seriously - how long are we going to let fat cat CEOs (and government accountants) get by with doing things in ways that would land any small business owner in jail? Since when is there supposed to be one standard for the filthy rich and politically connected and another standard for everybody else? That's not democracy, that's not even decency - that's an elitist oligarchy that makes up lenient rules for itself while persecuting (and prosecuting) the "unwashed masses" beneath them.

As long as they conceal the truth, they can continue to take advantage of people, and it's time we put a stop to it - not encouraged more of it. I strongly suggest you write to your district's members of Congress, House and Senate, and protest this further obfuscation of the financial crisis. The way that evil prevails is that good people do nothing - so do something, please.

If you're not sure who to contact, follow this link.

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