Friday, April 9, 2010

Smoke and mirrors

Major Banks Mask Their Risk Levels

Major banks have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public, according to data from the Federal Reserve Bank of New York. ... banks have become ... sensitive about showing high levels of debt and risk, worried that their stocks and credit ratings could be punished.

Posted by mken @ 10:38 PM (1267 views)
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4 thoughts on “Smoke and mirrors

  • Illegitimate lies masked by approved lies. I hope no-one’s surprised by this.

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  • What does ‘kiting’ mean?

    – The act of misrepresenting the value of a financial instrument for the purpose of extending credit obligations or increasing financial leverage.

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  • little professor says:

    Peekaboo accounting. Max Keiser has been going on about this for years.

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  • Remember the recent report on Lehman, which did the same thing with its Repo 105 and 108? By the time Lehman fell there was $25bn in capital supporting $700bn of assets/liabilities. No US law firm would sign off, or provide a favourable opinion on, Lehman’s Repo transactions but it got a London law firm to do this. Ernst & Young provided the accountancy services. The court-appointed Examiner said that E&Y “took no steps to question or challenge the non-disclosure of (Lehman’s) use of $50bn of temporary, off balance sheet transactions” E&Y replied “Lehman’s bankruptcy…..was the result of a series of unprecedented adverse events in the financial markets”. Sounds like Greenspan.

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