Lawmakers Now Pressing for Banks to Hide Losses Longer

Posted on July 29th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

This is infuriating.  When will the deception and fraud stop! 

It is actions like these by the Solon’s that has turned a ‘crisis of confidence’ into something that has brought the global financial markets to their knees.

The FASB is being pressured by the lawmakers to delay its time line on the revamped FAS 140 and FIN 46R. This of course will help out the financial institutions by creating less transparency and delaying the inevitable probably due to a new tax payer bailout being drawn up that will channel more dollars to parties other than those who need it, the US citizens.

Hasn’t everyone learned by now that transparency and confidence is the name of the game. -Best Mortgage 

NEW YORK, July 28 (Reuters) – The Financial Accounting Standards Board, under pressure from lawmakers, will reconsider its time line for a controversial rule change that may force banks to bring trillions of dollars in off-balance sheet assets onto their books at its Wednesday meeting.

FASB, which sets U.S. accounting rules, will reconsider the rule’s effective date and transition provisions, according to a schedule posted on its website.  Additionally, “the Board will consider transitional disclosures and the timing of both projects,” FASB said on its website.

FASB voted in April to revamp two accounting standards known as FAS 140 and FIN 46R, to eliminate a concept known as the “qualifying special-purpose entity,” or  QSPE, that banks use to keep assets like mortgage-backed securities and special investment vehicles off their balance sheets.

The board is expected to release its proposal by the end of August and leave it open for public comment for 60 days. It has suggested parts of the new rule could be applied as soon as next year for companies with fiscal years beginning after Nov. 15th.

Troubles in those off-balance sheet assets have been blamed for helping trigger the credit crisis. FASB members have said they believe the current rules prevented investors from understanding the true risks banks faced.

Analysts have estimated the rule change could force banks to bring $5 trillion in assets onto their books. Continued…






29 Responses to “Lawmakers Now Pressing for Banks to Hide Losses Longer”

  1. Delay it’s timeline until Bush is out of office……….

    If I were Obama and McCain, I would be SCREAMING from every hilltop about this!! They are only delaying the inevitable so the major crash does not happen on their watch…SICKENING!

  2. Nice ! That’s the typical American way and the Saudi whore way to. Don’t worry, foreigners specially Bush buddies in Saudi Arabia, are 100% behind the measure.

    Don’t forget the Prince running the Saoud Saudi Whore House, all “great democrats” (just kidding) from Ryad is the biggest shareholder of Citigroup.

    No coincidence that oil always sells off sharply when US banks go bad like yesterday. NOT A COINCIDENCE. This system is perfert. Mr. Mortgage, it’s time to buy buy buy ! Do not short and do not buy puts.

  3. Those assets SHOULD be on their balance sheets, NOWWW, and we don’t care how much damage is done!!

    It is time to pay the PIPER…Bush can’t hide behind his Mommy’s skirt forever….can we please get some responsible adults in government!?!!?!?!>

  4. For info. In Europe, the accounting standard there already requires these problem assets to be recognised by banks on their balance sheet, which is why key ratios look worse than those of US banks.

  5. No matter what they do.. bad, insolvent companies will die, and stable ones will survive.

    Its just a matter of timing.

  6. I call it neo-nazi accounting. Good how about taking the loss on 100 years period. Now you see ? You will never win with these nazis.

  7. as I said in my lengthy remark about Tony Buzan’s comments just below in response to Mr. Mortgage’s WAMU post, the malefactors always dictate the initial response to a financial crisis . . . until things get so bad that even they are finally swept away

    of course, that’s after we have experienced a horrible amount of pain and suffering

  8. Hey. These neo-nazis should maybe amortize the losses on 1000 years. Why not after all ? The 1000 year reich on real estate securitization. Good idea. I am out here. This country is cesspoole. Sorry for the comment. This is incredible and it proves your politicians are fascists and nazis.

  9. This is mostly about letting Citi mask their troubles. Citi is in the worst shape. $1 trillion off balance sheet.

  10. Anything goes. That’s why I say everything is useless. These bums could have politicians legiferate that the losses will be recognized on a 1000 year period. Yes I hate bankers and I hate US politicians. They are both scurges. Nothing good came from them. Nothing. Ok. Can we settle for 200 years ?

  11. Just another indication on how BAD things are with banks, ibanks, GSEs, hedgies, ect. I’ll bet if this action was not taken, runs on banks would bring it all down. So much for…. letting companies fail, huh? Total B.S. The crooks are running things. We get to pay for it.

  12. Mr. M. you are so correct about transparency and confidence being a key to a recovery. That is a real problem today and it is indeed affecting a turn around from having any chance of taking place. Nobody is buying this paper because they cannot trust what it is worth. This will only serve to delay that even further.

    Over a Trillion dollars in bundled mortgages were sold in 2007, while only roughly 48 Billion has been sold this year to date. Kind of tells you something doesn’t it? Nobody believes anybody anymore. Once you get burnt badly as many have you start to ask what the heck is going on.

    All of this L3 and off book crap had better start coming onto these lenders books pretty soon or they will just simply go under. Nobody is in the market for this crap until it is revealed what is actually there and marked to market. Just ask the NAB about that. The only player I see buying this stuff up is the American Tax Payer via the Fed. That can’t go on forever and the Tax Payers in this country are going to get tired at some point of subsidizing all of these companies. Once taxes rise to pay for it all (did you see the about face McCain just took) that will be it. People will take to the streets if they try to do it again. They have one shot at this and they don’t appear to be doing such a good job so far.

    This will only serve to make matters much, much worse for the companies themselves I would think as well. If you are not able to raise cash unless you are paying through the nose to do so, and you have little to sell that others want then why would you want to stay status quo? I would think they would want to try anything new in order to get moving forward again. This will push them back from a recovery in my opinion. The Fed cannot possibly bail out everyone!!!

  13. Financial index up almost 9%.. too funny.

  14. Hide the crap and amortize it on 1000 years.
    Good solution. I am sure Adolf Hitler Paulson is absolutely for this measure. I am sure Adolf Hitler Paulson is behind this great idea. Anyways the stupid foreigners are 100% behing the measure. Don’t bet against the stupidity of the rest of the world. Please believe me. Foreign investors are really stupid lot. I am sure it will inspire Spain and Britain next. Ok let’s settle for 200 years amortization. Zeig heil SS Paulson. And why not 1000 years amortization. You see. No more crises ! Everything is now settled ! It’s a blitzkrieg miracle frome Washington Waffen SS ! I am sure this idea came directly from the Firm. Yeah from Goldman Sachs, the mafia boys.

  15. You see. You take 1,6 trillion dollar loss and you amortize it let’s say on 1000 years, and voilà ! No problemo ! It’s as easy as that. You should close your internet site. No use. I am dead serious. You will not win against these nazis.

  16. Being Long stocks is pro-American .. being short is like being al queda.

    When losing, move the goalposts midgame, make rule changes midquarter, legalize fraud, cheating, previous illegalities. Accuse the other side (shorts) of playing dirty ball.

  17. That’s about it Zionist. If you don’t like the rules, change them. Paulson is one fine fascist like Bush and all their gang. I can’t even believe what’s going on. This country is a now a banana republic.

  18. Inondate with liquidity, lower down temporarly the price of oil, boost the dollar, differ the losses for a long long time. That way you “pump” the crap, sell shares and then you “dump” them after the elections. It’s working for a lot of the crap. It you amortize the 1,6 trillion loss on ten years, the crap goes up. Look mom it’s Paulson magic ! It allows to sell all the stock again and start again the whole game. That’s the game plan.

  19. I’ve been hearing conspiracy theorists say for a long time, a crash would come after the new president is in office.

    Wait, didn’t that happen with Herbert Hoover also?

    * February 2nd, Federal Reserve announces a ban on bank loans for margin trades
    * March 4th, Herbert Hoover is inaugurated as President
    * June 15th, Agricultural Marketing Act passed
    * August, economic expansion peaks…
    * September 3rd, stock market prices peak, with New York Times index of industrial stocks at 452..

    * October 24th, “Black Thursday,” recorded sales of shares hits 12,895,000

    * October 25th, market rallies, briefly
    * October 29th, “Black Tuesday,” recorded sales of shares hits 16,410,000. New York Times index of industrial stocks drops nearly forty points, the worst drop in Wall Street history to that point.
    * November 13th, stock market prices reach low for the year, with New York Times index of industrial stocks at 224!!

    I see a pattern here folks!

  20. Well keep in mind the AUDITED financial reports are due out at the first year, where they can’t get by with the quarterly report shenanigans.

    Having the auditors around is a bit like having the FBI over for dinner. Nobody particularly likes them. And with the FASB tightening up, there is sure to be lots of blood on the floor early next spring.

    More than half of it is a function of the calendar.


  21. Audited by Paulson and company. See. No problemo.

  22. All sarcasm aside, the top auditing firms were extremely chastened by the dismemberment of Arthur Andersen a few years ago and the various lawsuits with big payouts associated with some of the scandals of that period.

    Recall the sharp downdraft when the first wave of AUDITED financial statements after the subprime crisis hit most (not all!) radar screens last year.

    Then the accounting games began with the quarterly reports, many of those games highlighted here in this blog.

    If I can’t convince you, touch base with me in February 2009.


  23. Hey Marc Authier,

    Go crawl back under your bridge, troll.

  24. Well Duh !!! if you have to re-capitalize by selling new stock issues you can’t have the floor fall out from underneath just yet. Hold off all those losses till the bamks sell a few dozen billion worth. Then you can implement the new accounting standards. That way the Joe Sixers can pay the bills

  25. Any measures taken by lawmakers and other government bureaucrats are all destined to cause a prolonged and painful downward economic spiral. By making things less transparent they actually instill more mistrust between banks. This dampens banks willingness to lend, causing more economic hardships. This is what happened in Japan. Government intervention prolonged economic recovery for more than 15 years now. The similarities here are striking. Maybe our incompetent lousy and corrupt government wants us to suffer a long and painful standard of living downsize. I wonder what the end will be.

  26. Arthur Anderson got caugh. I don’t think you understand what is going on Tony. Now I don’t know if all these things will stick. But what I am implying here, that in the case of the banking system and the banks, Paulson and his bunch will do anything. Obvious has a good point here.

    Numbers or the reality of numbers are unimportant for them. You listen on TV these politicians saying that the losses of Fannie and Freddie are just 25 billion and you know that ANYTHING goes, including changing the accounting rules. What rules anyways ?

    By the way an amortization on 25 years for the whole and hole mess would be a good idea. Seriously. These people do not intend respecting GAAP standards or audited accounts. Why would they anyways ?

    Fundementally nothing has changed in the USA since ENRON, Arthurs Anderson, the Internet bubble, PARMALAT or Tyco. Nothing. Yes. It’s far worse than in 2000 ! 🙂 😮

  27. Truth doctor. Now that would be a nice nickname for George W. Bush. Truth doctor. I remember ENRON and WorldCon. The place hasn’t changed. On the contrary.

    Now, since september 11th, ENRON accounting practices are accounting standards at Fannnie, Freddie and ah yes, the United States of Debts. Like I said no problemo Truth Doctor.

    “If the lie is big enough, and you repeat it continually, they will believe it.” Goebbels. That’s what Paulson, your politicians and the bankers are doing.
    I is partly working. I am impressed.

  28. Maybe this is partly why there is total panic in Washington right now…

    I don’t know if this statement is true, but I trust if Roubini said it then it must be. All of this L3 and off balance sheet paper is growing at an ever alarming pace. If some of these lenders are forced to take this sludge back onto their books they will almost instantly be underwater themselves by the looks of it. The FDIC would equally be underwater and everyone would need to be bailed out at the same time with no money left in the till to do so. Fannie and Freddie will see to that pronto as they are ever so close now to sucking a quick 50 Billion or so in my opinion from the American Tax Payers.

    Here is Roubini’s quote and it is rather ominous to say the least!!!

    Professor Nouriel Roubini of New York University, one of the first economists to warn of the dangers of the American house price boom, believes the number of people positively choosing to walk away is growing rapidly.

    “This is becoming a tsunami of voluntary defaults,”

    “The losses for the financial system from people walking away could be of the order of one trillion dollars when the entire capital of the US banking system is only $1.3 trillion.

    “You could have most of the US banking system wiped out, so this is a total disaster.”

  29. Oh come on now. This is what politicians have always done:

    “Hope that the problem will go away or fix itself.”

    Delay is the only solution they can agree on. Everything else admits failure.

    Failure in regulation.
    Failure in oversight.
    Failure in recognizing that they had let Wall Street construct a house of cards so intertwined that all the players had to be bailed out.
    Failure to protect the homeowner (home debter).
    Failure to protect the 401Ks that had replaced the pension plans of old.
    Failure to protect the suckers that bought what Wall Street sold.
    Failure to protect the dollar.

    These were the “Friends of Tony Mozillow” who got special deals on their home loans.

    Did you think that the rules of FASB 157 and Basel II would be allowed to expose the Enron like carnage that has occurred?

    No way! There are other rabbits that will be pulled out of the hat before the first Tuesday in November.

    After that, the sky will be falling.

    God help the next president. I wish him well, whoever he may be.

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