Yet More Voodoo, And The Banks Tank
THE SEC, in the shape of the Cox who recently discovered that self-regulation doesn’t work, seems determined to put the US into the death spiral; having tried some voodoo accountancy changes some days back which did nothing to help matters, they’ve done it again.
As Bloomberg reported today:
‘The U.S. Securities and Exchange Commission agreed to back an effort by banks that may let them delay writedowns on a type of security that has declined in value during the collapse of the credit markets.’
That was, as Floyd Norris, chief financial correspondent of The New York Times and The International Herald Tribune, noted today, completely contrary to the view of the accountancy profession:
The major accounting firms all agreed that banks could not use one tactic to inflate values of a class of assets, but the S.E.C.’s chief accountant yesterday decided they could do so.’
For the benefit of those unfamiliar with what accountants do, I should point out that they advise people who may be thinking of investing in companies whether their accounts present a true and fair view, and can therefore be relied on to justify an investment.
Sadly, whilst the American Banking Association may believe that ‘This is really good news’, the people who might have invested in the American banks will not now be doing so. No-one in their right minds will ignore the settled view of the accountancy profession that this is voodoo accountancy. As Floyd Norris has noted:
‘You do not restore trust by letting banks say toxic assets are worth whatever the bank’s own models say they should be worth, when they are trading for far less.’
Indeed you don’t; all you do is convince the people who might have been prepared to lend a hand, as well as money, that they should back away as fast as possible to avoid being sucked into the Black Hole of the US banking system.
The problem is that the Black Hole may well take us all if these morons keep on going…
– Chenier
Posted: 16th, October 2008 | In: Money Comment | TrackBack | Permalink
