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US standards body agrees accounting changes

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posted on Apr, 2 2009 @ 11:54 AM

US standards body agrees accounting changes

Bank stocks were boosted on Thursday by an accounting rule change that is expected to allow managers to repair balance sheets by recalculating the value of some of their most troubled assets.

The Financial Accounting Standards Board voted on Thursday morning to allow banks more freedom to use their own valuation models, rather than current market prices, for assets where markets have become illiquid. A second rule change means banks will only have to recognise a part of any impairment in their profits.
In depth: US banks - Dec-12
Editorial: Revising the rules - Apr-01
FT Interview: Josef Ackermann - Apr-01
Letter: Dutch securities regulator on dangers of political meddling - Apr-02

Citigroup jumped 9 per cent in early trading, Wells Fargo was up almost 11 per cent and Bank of America added almost 10 per cent

Some analysts have calculated that the change could allow a profits boost of up to 20 per cent in the quarterly earnings of some banks.
(visit the link for the full news article)

posted on Apr, 2 2009 @ 11:54 AM
Sniff! Snifff!! Do you all smell something cooking with this?

Is this cooking the books or what?

I got this strange feeling that this move was taken so that banks could show a bigger profit, which in return could boost investors confidence. Is this yet another sign of how easily people can manipulate our finance system.

I have said throughout this crisis that our accounting system is part of the problem in this crisis. Remember Enron.
(visit the link for the full news article)

posted on Apr, 2 2009 @ 12:27 PM
reply to post by jam321

This is a shame. Who is gonna be Sc####d by these new mesures ?

Average investors. Common folks, and RRSP (canadians) 401K (Americans) holders.

This is about legalizing frauds, and allowing free lunches for untrustworthy portfolio managers.

If you pick a stock to invest in, you look the infos they provide. Now that they can mark-to-model. It is all C##py.

On they other hand. Insiders from companies or board of trustees practicing these way of accounting will get the real numbers, YOU WON'T.

Those who will contract over the counter for CDS, will get the score right.

Like the OMG in food, you would like to know waht you are buying, but you won't. You won't be able to know who has and you doesn't have esoterica accountability.

If it helps the stock market pricing on the short term (and really short term), on the middle term and the long run, it will delay collapses from so called good businesses, wich in fact will have been in trouble from the start.

If it is done to reinstate confidence, it will be soon to be a faillure.

What are supposed to do those rating agencies, who by the way, perfomed and gave so much good advice lately with their AAA rating ?

With less confidence in the stocks, Governments might expect folks will go after treasuries. That's why they might accept these reforms.

But treasuries are not now the safest place even.

NOPE, They set the clock for a bigger disaster later on.

posted on Apr, 2 2009 @ 12:46 PM
So much for the CPA oath.

Looks good on paper though.

posted on Apr, 2 2009 @ 12:57 PM
Pathetic. If you screw up now it's OK to 'change' reality with a "guess" about future value....

Shameless, unbelievably shameless.

Once again, the banksters are authorized by our government to do things that would land any lesser citizen in jail.

And the MSM and their puppeteers want to make sure this is touted as a 'good' thing.

posted on Apr, 2 2009 @ 01:05 PM
Sarbanes Oxley will be next to go.

The solution to increased risk is apprarently to reduce the controls.

posted on Apr, 2 2009 @ 01:16 PM
I have a 73 pinto. I think it is worth about 20k . Surely the banks will loan me that much on it. It is the same principle.



posted on Apr, 2 2009 @ 01:22 PM
Appreciate the comments. I share your same views.

This is nothing but a rip off in an effort to conceal real numbers.

posted on Apr, 2 2009 @ 01:31 PM
This is just pitiful. This morning when the stock market took off my first thought is what do they know that is being overlooked by the G20, guess I know now!

How can they perpetrate this fraud???? What I would love for someone, anyone to tell me is how long before all these very expensive band aids are going to give way?

Truly the banks run the whole damn world, what a sad revelation and anyone who cannot see that is a fool, a damned fool.

posted on Apr, 2 2009 @ 01:33 PM
Considering the banks did such a great job of evaluating their worth in the first place, I don't see why they now can't re-value their worthless assets as they see fit.

posted on Apr, 2 2009 @ 01:51 PM
From a yahoo article

Investors take a different view, saying that more flexibility with the rules would let big banks hide the real value of their toxic assets.


Robert Willens, an analyst who specializes in tax and accounting issues, said the changes will help banks cosmetically and increase their capital levels.

"Yet I'm finding the investors I speak to are mostly disappointed because it doesn't change the reality of the banks," he said. "This may end up being a dark day in history before it's all said and done. It's a pyrrhic victory."

Banks are winning all the way around.

Government is funding them, they're still ripping off Americans, and now they get to hide some of their toxic assets.

posted on Apr, 2 2009 @ 03:53 PM
This is more or less less my thought on this accounting change in a nutshell. The government wants people to believe that what they are doing is working. As of now they have no proof. With this change, they can start to produce that falsified proof.

For the above mentioned reasons, by banning marked to market you can fully expect the banks to start churning out a couple of profitable quarters. The pundits will proclaim the recovery is on, which is really the ultimate goal of the government. Markets will rally and Obama will say I told you so. Then there’s people like you and me who recognize it for what it is and take this opportunity to profit. This false rally will be a great time to get short the financials.

posted on Apr, 2 2009 @ 04:00 PM
reply to post by jam321

Unbelievable. I'm an Accountant. If you want the translation, here it is: "yes! go ahead and just make up a number!

This is one of the most desperate acts I've seen yet. Does anyone realize that this behavior and number inflating just devalues everything? Before we know it, there will be nothing left......and I mean nothing. In fact, I wouldn't be suprised if we are already less than zero.

F************ pathetic.

posted on Apr, 2 2009 @ 04:03 PM
reply to post by jam321

My point exactly. Why is it that the general public cannot see these blantant lies? It is painfully obvious what is going on. More bad paper, more fake numbers to keep the machine going for just a bit longer. Honestly, if there were any hope of recovery, they'd have to start getting real with the figures. Clearly that's not happening. Now they are allowing banks to claim assets that they don't have or over-value ones that are crumbling. Who do they think this is going to help???? It might help the market for a week or so. This is beyond comprehension to me, seriously.

posted on Apr, 2 2009 @ 04:03 PM
This guy actually fooled Houdini. I suppose we are the ones being fooled now.

Follow the dollar sign and decimal point...

posted on Apr, 2 2009 @ 04:25 PM
This rule change is sensible. The way the rules were, if your neighbors house was on the market and he couldn't sell it, then you would also have to value to your house at zero. Since your collateral is supposedly now worth zero then the bank calls your loan. Come up with the cash orlose your house. This in a manner is what happened to the banks.

We all know your houses aren't worth zero, so it only makes sense to come to some compromise on what the true valuation actually is. Sure there will be inaccuracies inbred in the process, but one thing we know for sure is that the current valuations do not reflect current realities. The reality for the banks is that they will be writing up these assets and adding to earnings for years to come. Before you scqueel about cheating and the such, realize that much of the losses the banks have reported haven't been real either. They were only the result of poor accounting rules that were never adjusted for the repeal of Glass Steagal. Banks had always valued assets as they now will under the new rules. The merging of brokerages and bank brought the brokerage rules into the banks which weren't appropriate and as a result caused the economy and taxpayers severe pain .

Accountants and the FASB hold a big part of the responsibility for these declines. Next thing to go is expensing stock options. The expense of stock options is already included through dilution of shares. Requiring them to be expensed is duplicity and only serves to lower company earnings further than they should.

When investing look at cash flows as earnings is an extremely manipulated number.

posted on Apr, 2 2009 @ 06:40 PM
Sarcasm ON> Replacing mark to market with Mark to Make believe should surely restore confidence and improve transparency.

I agree that some changes to accounting rules are in order but don't trust the people calling for relaxation of M2M one bit. They are after all the ones who are most responsible for this mess. I understand that there needs to be a process for valuing assets that are currently trading at distressed prices but still performing. Smarter people than me have laid out some ideas like forcing any entity with a marked-to-make-believe asset to first prove that the prices currently listed on a market for an asset were the result of a distressed sale, and that the model they use to value the asset be published so that investors can see how/why the value was derived.

I might have some confidence that this revision is a good thing if they had first forced currently unregulated derivatives onto regulated exchanges with central clearing and margin supervision. Since that did not happen, I'm pretty sure that the politically motivated FASB rule change is simply a way to help crooks continue to be crooks. Given the experiences of the past 18 months, I don't see how any thoughtfull person could believe different.

There is nothing wrong with trading the pumps news like this gives the markets though. I'm not but have been tempted to, but the velocity and violence of the recent rally have convinced me it's just a Bear Market rally. Which is fine, I personally get more satisfaction from shorting this market (mainly with puts and inverse/double inverse ETFS) and Bear rallies are great for putting a little meat back on the bones of the walking dead.

posted on Apr, 2 2009 @ 09:00 PM
reply to post by jefwane

I'm pretty sure that the politically motivated FASB rule change is simply a way to help crooks continue to be crooks. Given the experiences of the past 18 months, I don't see how any thoughtfull person could believe different.

I agree with everything you said here.

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