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’Re-recognised in 2011
What the market may have overlooked in the last quarter and this one, handily written up by Florida-based accountants MBAF (back in August):
During the final months of 2011, banks will need to begin preparing for compliance with a recent Financial Accounting Standards Board requirement on the accounting treatment of repurchase agreements.
The extend and pretend exposé – coming to a bank near you
In March, the US Securities and Exchange Commission fired off a few letters asking a number of America’s regional banks to clarify their loan modification practices. In particular the SEC is reportedly looking into “troubled debt restructurings”
Good books, bad books at the banks
Spotted on the Financial Accounting Standards Board website:
FASB may have backed off mark-to-market accounting for banking assets, but the US accounting body might still decide to make some significant changes to the way banks provision for loan losses (you know,
An accounting boost for CoCos
How regulators can build a market for reasonably-cheap-to-issue Contingent Convertible capital, by Barclays: Step 1) Eliminate mark-to-market accounting to ensure that asset price swings never result in a CoCo trigger being reached…
2011 is the year of accounting ‘condorsement,’ Fitch says
This is meant to be the year of accounting convergence.
You’re probably already yawning by now — but wait! This is important.
Countries including Canada, Korea and India are expected to implement International Financial Reporting Standards (IFRS) in 2011 — but the accounting world’s attention will really be focused on what the United States decides to.
From Hamp footnote to Hamp legacy
A footnote, from the US Treasury’s Hamp programme.
The Home Affordable Modification Plan was created in the spring of 2009 with the stated goal of keeping delinquent homeowners in their houses. It’s now widely regarded as a failure — with just 519,648 permanent modifications completed.
FASB’s mark-to-mayhem
Tremble US financial institutions, for FASB is about to fair value your assets.
The US Financial Accounting Standards Board has published a proposal that would require banks to report the fair value of most of the loans on their books,
Level 2 assets are the new Level 3
Or, bye bye FAS 157. Hello Topic 820.
The accounting standard known as FAS 157 gained not-a-small amount of notoriety last year.
In March of 2009, the US Financial Accounting Standards Board (FASB) changed the rule,
From Level I to Level III, the myth of fair value
Fair value –or mark-to-market — accounting is back in the news.
The IASB and FASB, the European and US accounting standards boards, are reportedly grappling over global accounting convergence because of the issue. From the FT:
The genesis of Repo 105
Continued from ‘Repo 105,’ in which FT Alphaville began dissecting the official 2,200-page Examiner’s report into the Lehman Brothers bankruptcy.
In 2001 Lehman Brothers held a meeting with its lawyers and auditors.
Unintended consequences, accounting for Basel edition
No adjustment should be applied to remove from the Common Equity component of Tier 1 unrealised gains or losses recognised on the balance sheet.
Thus read the Basel Committee’s recommendations for strengthening the banking sector,
Fair value foresight and equity destruction
A Friday accounting curio courtesy of Fitch Ratings.
The agency’s done a report on the US banks and fair value, looking at a sample of 20 of ‘em to estimate the impact of potential new accounting rules.
Citi of questionable accounting and reserve provisioning
Citi has never been a paragon of accounting standards, so it’s with little surprise that we read the latest work from the oft-controversial Bloomberg columnist, Jonathan Weil.
Weil has been a vehement critic of Citi,
How accounting changes can create a world of investment banks
“Accounting changes must be coordinated,” ran headlines on Fed Governor Elizabeth A. Duke’s Monday speech.
In actuality Ms Duke went much further — not only suggesting that the world’s two major accounting bodies,
Bringing it back (on balance sheet)
Amid all the accounting-related chicanery currently taking place, the one below, we think, has been flying rather under the radar.
From Asset-Backed Alert:
U.S. government officials are aiming for September to decide once and for all how banks’ capital reserves should reflect a tidal wave of securitized assets that are headed for their balance sheets.
Accounting is semi-officially exonerated from causing crisis
Phew. That was close.
The Financial Crisis Advisory Group has come out and said it — accounting rules were not the root cause of the financial crisis.
In fact, the FCAG, jointly set up by the international and US accounting standards boards,
Sympathy for the ASBs
Pity the accounting boards trying to come up with new fair value, or mark-to-market, accounting rules, with industry feedback like below.
It’s from Valuation Research, which undertook a survey on attitudes towards fair value accounting.
The IASB does fair value
Behold the International Accounting Standards Board’s proposed revisions to IAS 39.
IAS 39 being an accounting principle at the centre of much controversy in recent months and even years. The standard sets out how to value financial instruments,
Quo vadis QSPEs?
Off-balance sheet vehicles — qualified special-purpose entities, or QSPEs — were blamed by many for fuelling the financial crisis: helping banks hide their true leverage and avoiding regulatory capital requirements.
Marketing mark-to-market changes to the FASB
For an insight into the kind of lobbying that took place before the US Financial Accounting Standards Board agreed to ease mark-to-market rules, we direct you to this 2,180-word Wall Street Journal story (H/T Felix Salmon).
IASB under pressure on M2M
In case you missed it on Saturday.
PRAGUE, April 3 (Reuters) – European Union finance ministers called on a global accounting standards setter on Friday to change one of its rules in line with a reform of its U.S.
FHLB, the ‘B’ stands for Bowsher
Charles Bowsher is a name you probably don’t know.
Until March 24 he worked as chairman of the Federal Home Loan Banks’ (FHLBs) Office of Finance. Then he suddenly quit. Why?
Bloomberg’s Jonathan Weil reports (HT Zero Hedge):
The international FAS 157-e
The US accounting standards board – the FASB – voted to change mark-to-market rules yesterday, in a widely-expected move.
The analysts – and pundits – have had plenty of time to formulate their opinions on the subject; here’s a selection.
M2M mystery at Morgan Stanley
Morgan Stanley is sitting out of this particular US bank rally. Why?
There’s no real specific MS news. However, if the banks really are rallying based on changes to mark-to-market accounting in the States (despite the fact that these have been widely expected for weeks — whatever happened to buy the rumour sell the fact?) then perhaps this has something to do with it.
M2M (or FAS 157-e) change confirmed
From Reuters.
FASB AGREES OBJECTIVE OF MARK-TO-MARKET ACCOUNTING IS STILL WHAT WOULD BE RECEIVED IN AN ORDERLY TRANSACTION IN THE CURRENT INACTIVE MARKET.
FASB SAYS AN ‘ORDERLY’ TRANSACTION DOES NOT INCLUDE FORCED LIQUIDATION OR DISTRESSED SALE.
M2M Change = Time to buy banks?
The FASB’s amendment to mark-to-market accounting rules looks set to be approved today — giving US banks more flexibility to value their assets.
Time to buy banks then? Not quite.
While FAS 157-e,
Letters to the FASB, US citizens do accounting
The US accounting standards board, the FASB, has been considering changing mark-to-market rules for some time.
The board invited submissions on its proposals earlier this month and they’ve since been published on the FASB website (HT Option ARMageddon).
Remarked to market, a bonus for US banks this week?
The onslaught against mark-to-market accounting continues. This week being a rather crucial one. Readers may recall that the FASB — the regulatory body which determines accounting rules and policy in the US – announced a series of changes to its mark-to-market rulebook a fortnight ago.
Don’t you know that you’re toxic?
Reuters columnist John Kemp points us in the direction of this story.
WASHINGTON, March 16 (Reuters) – Financial companies could paint a rosier picture of some assets under a proposal by the U.S. Financial Accounting Standards Board that follows criticism of an accounting rule that has forced billions of dollars of writedowns during the financial crisis.
Surprise! Value from the SEC
Reeling from an annus horribilis amply larded with policy blunders, the US market regulator, the SEC, now facing serious pressure, is perhaps finally beginning to talk sense.
Just before year end, its head,