Commentaries

Now raising intellectual capital

from Rolfe Winkler:

Lunchtime Links 12-8

(Reader note: still working on the bugs....please click "continue reading" to see all the links)

Banks, U.S. spar over TARP repayment (David Enrich) This is the kind of thing that gives me a better feeling about Tim Geithner and Ben Bernanke. They are hammering banks to raise equity capital to get out of TARP. They have leverage and are using it productively, forcing bank shareholders to eat losses via dilution so that balance sheets are more stable. Great! Stick to your guns guys!

Questioning the unemployment rate (Kaminska, Alphaville) Dennis Gartman doesn't buy the good news in the jobs report.

FASB wants accounting standards "decoupled" from bank capital rules (Norris, NYT) Can you blame 'em? Seems to me Bob Herz just wants to be left alone. If regulators want to give banks more slack, fine.

from Rolfe Winkler:

Amendment could neuter FASB

Sarbox isn't the only regulatory regime under threat. As Ryan Grim writes over at HuffPo, an amendment has been introduced that would put FASB under the thumb of the new systemic risk oversight council, and give the council the power to literally do away with inconvenient accounting rules that pose a problem for banks.

Astonishingly, at a time when the public is crying out for greater regulation to limit excessive risk-taking by financial institutions, the banks are trying to get Congress to agree that the next time there's a big downturn, they should have the ability to alter their accounting standards -- essentially, fudge the numbers -- so that the public and investors won't be able to tell how insolvent they really are. By ignoring their declining asset values, they can avoid the standard requirement of raising more capital.

from Rolfe Winkler:

America’s Japanese banks

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A banking system loaded down with hundreds of billions of dollars worth of unrecognized bad debt -- Japan in the 1990s? No, it’s the United States today.

And where are American banks hiding their losses?  Among other places, in their loan portfolios.

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