Tuesday, May 19, 2009

FASB Passes Rule, Bankers Vow to Find New Ways to Hide Risky Assets and Massive Liabilities

So, the Oracles of Double-Entry Accounting passed amendments to FIN 46(R) yesterday: “The desire to provide additional transparency to investors was the key driver behind today’s decisions.”

Ok, so what that really means is that the FASB passed new rules on the interpretation of the off-balance sheet accounting rules originally issued in the shitstorm that followed Enron's little booboo. Banks were doing some fancy-schmancy things to get those not-so-good loans made to the dead and unemployed people off their books. The new amendment will force banks, as the party who absorbs a majority of expected losses or returns, to move tons of assets and their related liabilities onto their balance sheets.

Banks, shockingly, didn't approve:

The rule change will hurt banks and the economy by discouraging lending, said Wayne Abernathy, executive vice president at the American Bankers Association in Washington. “It will affect fee income and the economy’s ability to rebound on the lending side,” he said in an interview before the vote.

The good news is that Barney Frank has already gotten wind of this and Congress will soon be writing the accounting rules and we can all get back to living in a world where anyone can buy a house.

FASB Rule Will Force Banks to Move Assets Onto Books [Bloomberg] Sphere: Related Content

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