Committee Of European Banking Supervisors Issues Statement After Getting Caught Commiting Fraud By WSJ
The CEBS has just issued the following statement on the recent disclosure by the WSJ that not only was the stress test a fraud, but all sovereign debt representations continue to be lies (and EuroStat still has no clue what the real debt of Greece is). In other words it all contained - buy stocks, sell puts, take our a 7th mortgage and buy that long awaited 576th iPad. In the meantime, lies and fraud shall continue until confidence returns.
CEBS Statement on the disclosure of sovereign exposures in the context of the 2010 EU-wide stress testing exercise.
CEBS notes that the EU-wide stress testing exercise conducted on 91 European banks and published on 23 July 2010 was an unprecedented exercise designed to assess the resilience of the EU banking system to possible adverse economic developments, in particular shocks to credit and market risks, including sovereign risks.
Individual disclosures of sovereign exposures were an essential component of the exercise and a great enhancement in terms of transparency. This transparency efficiently complemented the design of the sovereign shocks applied in the adverse scenario of the stress test exercise, which excluded the possibility of a sovereign default. In order to harmonize the reporting and to provide a meaningful and consistent view of banks exposures to sovereign debt, CEBS and national authorities jointly developed guidance to the participating banks. In particular:
The “gross exposures” disclosed were on-balance sheet exposures net of impairments but gross of collateral and hedging. In order to provide a meaningful picture of the economic risk borne in the trading book, banks were allowed to deduct offsetting short positions when reporting gross exposures.
CEBS notes that comparison with other sources should be treated with caution as a result of different reporting dates and reporting methodologies. For instance, data provided by the Bank for International Settlements (BIS), is aggregated in a way which makes comparison with the data disclosed by banks during the CEBS exercise impossible.
So a gross number becomes even more "gross" when adjusting form something totally different? There was a time this was called "netting"... but in ECB-ponzi Europe, gross is to net as mark-to-market is to mark-to-unicorn.
And now you know - it is not fraud, it is merely "impossible" to compare two numbers that differ by 3 zeroes cause, you know, it's Europe after all. And nobody knows anything. So all is good.