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Posts Tagged ‘extend and pretend’

BofA Shareholders, ‘How Long Can You Tread Water?’

Posted by Larry Doyle on June 13th, 2011 9:03 AM |

What did the Lord say to Noah?

The same thing that Bank of America CEO Brian Moynihan might now be saying to his shareholders. That is, ‘how long can you tread water?’

Bank of America’s stock is down approximately 25% on the year and close to 35% over the last twelve months. While it has doubled from the Armageddon lows seen in 2008, the stock has fully retraced any moves higher since early 2009. ¬† (The graph of Bank of America below is sourced from Market Watch and covers the last three years).

What gives? Will Bank of America need to raise more capital? Will it need another lifeline from Uncle Sam?

(more…)

IASB at Odds with FASB on ‘Extend and Pretend’

Posted by Larry Doyle on November 5th, 2009 3:15 PM |

Extend and pretend!!

What is that? In large measure, accounting practices for financial institutions in the United States promote practices which ‘extend’ the terms of the loan or asset while ‘pretending’ as to the real value of that loan or asset.

Regardless of what one thinks about the integrity of these business and accounting practices, the fact of the matter is they are prevalent in our financial industry today.

As I referenced in writing about the Financial Accounting Standards Board (FASB) yesterday, I believe this board felt emasculated in having the relaxation of the fair value mark-to-market rammed down its throat by Wall Street and Congress.

There is another accounting board which has a decidedly different take on the accounting of financial assets. Who might that be? Let me introduce you to the International Accounting Standards Board, otherwise known as the IASB. (more…)






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