Why? Because the folks who have the most to lose by forced transparency have complained! What a stupid reason to fold by the FASB.
"Thus far, I think the count is up to about 1,500 or so comment letters," said Lawrence Smith, a board member of FASB, which sets U.S. accounting rules. "I think I've read one that supports what we propose."
So what if the letters are 1,500 to 1? That the banks and finance companies are writing all these letters is probably the best evidence that MTM is desperately needed.
Smith added that board members will probably be influenced by the opposition.
"If I were a betting person, I would bet on some type of hybrid model being adopted".
Well I am a betting person and I will bet that there will be no MTM from FASB. They will crater to their own constituency and do the wrong thing for the investing public, again.
This makes a joke of:
-The FASB
-The companies who wrote the letters
-The SEC
-The accounting profession
-FinReg, as it is proving to be a toothless set of regulations
-The US Treasury. (they did not write a letter)
-The Federal Reserve (who also did not write a letter) the Fed has been pushing on this issue and will not step up to the plate when necessary.
The banks are all afraid of MTM. They want to be able to hide an asset on their books that is worth 50 cents on the dollar and maintain it at 100 cents. When FASB blesses this insanity the banks will just abuse the rule to hide more junk.
So when you are out there buying bank stocks know that the assets you think are there have nothing to do with the fair value of those assets. That the financial statements you read are just a charade. You can draw no conclusions on the health of the company you are investing in. And that the FASB has blessed it and wants it that way. Caveat Emptor.
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I am so angered by all of this. Accounting is nerdy. These fuckers at FASB could be heroes for bringing in transparency. It would force all players to fix the system, rather than hide it with short term solutions.
ReplyDeleteI really wish someone would stand up and say enough is enough. Someone actually taking a leadership role and laying down the law.
Fuck you lobbyists, fuck you banks, fuck you fed, fuck you accountants, fuck you FASB, you are destroying capitalism!
Thanks for this , Bruce. I think I will file it away and use it as an antidote whenever I hear someone pontificating on the banks' and insurance companies' low price to book value ratios.
ReplyDeleteplease see tom brown's post from today.
ReplyDeleteplease see tom brown's post from today.
ReplyDeleteHere's a link.
First he owns up:
I take a particular interest in the changes you have proposed. I run a hedge fund that invests solely in banks and financial services companies,...
Honorable of him.
Then he goes on and on. In the end what I think he's saying is that if they pass this rule change then the stock price of banks he has invested in will go down. Which from his point of view is not good.
Bruce,
ReplyDeleteHere are the names and email addresses of the FASB board members. Anyone wishing to email them is highly encouraged to do so. Might I suggest telling all your friends and family to do so as well ...
Micah
Board Members - Email Address
Robert Herz - rhherz@fasb.org
Thomas Linsmeier - tjlinsmeier@fasb.org
Leslie Seidman - lfseidman@fasb.org
Marc Siegel - masiegel@fasb.org
Lawrence Smith - lwsmith@fasb.org
It ain't over until it's over. That's one board member, speaking for himself. You still have two new board members coming on board; we don't even know who they are and how they will vote.
ReplyDeleteThere won't be any decision until the Board has gone back and actually considered any real comments in those 1,500 letters. There may be some useful nuggets in there.
Rarely considered by most but true: FASB has passed unpopular stuff before when the wind was blowing against them. FAS 87 (pensions)in late '80's; FAS 106 (health care liabilities) in early '90's; FAS 109 (tax accounting) in early '90's. The only thing they get remembered for is their fold on options expense in early '90's and the "other than temporary" takeover by Congress in 2009. There's still a chance they'll do right here.
Linsmeier and Siegel are on the side of transparency. Recently, after Sir Tweedle, head of the IASB spoke as a Guest speaker at a business event and emphasized the importance of getting everything done quickly, Siegel was asked if he agreed with Tweedle. He replied that what's important is getting it done right.l He's been insisting on getting input from those affected by FASB decisions before setting new guidelines. Sir Tweedle wasn't pleased. So there is hope. Tweedle is leaving in June. His replacement has indicated he's for transparency.
ReplyDelete