Wednesday, April 01, 2009

More Torrid Affair

Today is Wednesday, 0 April 2009.

An interesting article in the Business section of today’s The New York Times: “Banks Are Set to Receive More Leeway on Asset Values“ by Floyd Norris.

Yes, concerning the fantasy accounting rules which will probably be mandated by close of biz tomorrow. Seems those who would benefit are flooding the Financial Accounting Standards Board with mail.

From The Times:

“The file also includes letters, evidently solicited by banking organizations, from groups contending that relaxing the rules would allow banks to report higher profits and make more loans.”

“The Georgia Affordable Housing Coalition submitted such a comment, perhaps without carefully reading it. The opening paragraph states, “This letter sets forth the comments of [insert name of organization here] regarding these proposals.”"

Georgia Affordable Housing Coalition. Sounds like an upstanding, grassroots gathering of starry-eyed do-gooders, doesn’t it? Actually, it’s a trade association.

From its website: “The Georgia Affordable Housing Coalition, Inc. is the premier organization representing the affordable housing industry in Georgia. Incorporated in the fall of 1996, the Coalition represents the interests of developers, lenders, syndicators, and other related parties who participate in the state's Low Income Housing Credit program.”

Note the phrase “…would allow banks to report higher profits and make more loans.” Not require, of course. The rule change would also enable banks to report higher profits and shovel out higher salaries, bonuses, and dividends instead of loans.

Robert H. Herz, chair of the FASB, has a fine descriptor for the rule change: “mark-to-management”. Of course, that was before a majority of Democrats and Republicans in Congress, the finest public servants money can buy, made it clear that FASB best grovel before the golden calf of Big Banking, OR ELSE.

This is the sort of violation of transparency that enabled Enron to conceal massive debts, amounting to insolvency, off-balance sheet.

Of course, perhaps the FASB will vote for the interests of the majority of stockholders, and against the interests of lying management.

April Fool’s.


Anonymous princess of the far etc etc said...

More good observations on how new convoluted antics are already in the works.

On a cheerier note:


(Sorry there is no sound.)

5:17 PM  

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