This page has been archived and commenting is disabled.
FASB’s Karma
In my view the Financial Accounting Standards Board is doing the country
a great disservice. A few years ago when the feces was hitting the fan
on a near daily basis it became abundantly clear that accounting
standards had to be changed.
Two areas that were abused big time and contributed to the problems were the issues of mark to market and lease accounting.
These categories are where big leasing companies can hide debt and
manipulate earnings. Financial firms can hide book losses under the
guise that they will “Hold to Maturity”. Insurance companies can write
derivate contracts that are “off the books”.
There were firm promises made that things would change. Unfortunately FASB has folded like a cheap suit in the rain.
There will be no better disclosure in the future than in the past.
Therefore the past will be repeated in the future. The scary thing is
that FASB is a financial slave to those who benefit. Same old, same old.
I keep hoping that there is a Yin and Yang in the world. Some hidden force that attempts to bring balance. Who knows? In the case of FASB they might have just gotten hit on the head with some Yang. Consider this lawsuit:
This is a patent/licensing suit. I don’t know the merits. Just the suggestion that FASB was playing fast and lose makes me grin.
The case has made it to Federal Court. So there will be a ruling. I’m
hoping FASB loses big time. They have that “Bad Karma” thing hanging
over their head.
»
- advertisements -
It shows you how much power our corrupt government has over even private regulators like FASB, by threating to take their rule making abilities away if they don't comply.
Great find, Bruce. I'm actually happy to see this, since as a CPA I felt really betrayed when FASB caved on the issue in '09. Ultimately, the blame does fall on the Congressional subcommittee that threatened the Board, but it still seemed kind of chickenshit for them to give in to the coersion and relax the M2M rules.
I know they were trying to keep from being crushed by corrupt officials and lawyers, but what's the point of avoiding that kind of outcome when the alternative is to allow the Board's independence to be destroyed? Either way, the organization will have been compromised, but at least you get to go down swinging if you choose to follow your core principles.
Your slip is showing (while you are lying out your ass).
""Don't blame me for what happened in the 17 years since I have been playing for the other team. I have been bitching (and writing) about things for years.""
appreciate it
In caving to political pressure by agreeing to suspend mark to market, FASB has already lost the only thing it had to offer - credibility.
This fact just hasn't been fully exposed & recognized as of yet, but it will eventually, once the entire US financial system (& world reserve currency) implodes and those left to pick up the pieces eventually come to the conclusion that not forcing financial entities to recognize losses in order to clear the underlying assets simply delays the inevitable and makes the collateral damage (so to speak) much worse.
You are absolutely right.
They are politically influenced, the rules changed to protect the guilty and everybody got paid.
Bruce,
I'm wondering if they're trying to imply a sort of control fraud that favors the finacial sector vis a vis others. I'm also wondering why FASB hasn't been named by investors who lost big in FNM FRE AIG etc. under the same guise. I think someone is trying a roundabout method to RICO.
Please tell me at some point we will do the right thing. If not, this country will continue to deteriorate until we are a second rate power. If we had term limits on the scum in politics more of the "right stuff" might be done.
We were a great nation.
:(
Not so optimistic, judges can be bought and sold, you know!
Interesting enough Orly.
How is your FX going?
Rough. Like everyone else nowadays, I suppose. (If only to make myself feel better...;)
But, as there is yin inside of yang and there is nothing the Fed can do to change that Law of the Universe, it is inevitable that things return to a less manipulated environment- even if it means manipulating it so much that it becomes un-manipulable again.
I am a chartist. That's what I do and I need markets to function within even influences, otherwise my charts become worse than worthless. But...
Gravity always wins- and I'm on the side of gravity. :D
Thanks for asking!
"I keep hoping that there is a Yin and Yang in the world. Some hidden force that attempts to bring balance."
_______
Of course there is a yin and yang in the world. It is all there is. It only means, "entropy." Most people don't understand the concept, so if I may explain to those interested, I would be very happy about that.
The yin/yang symbol explains a great deal more than that there are two distinct "directions" in the Universe. The picture is actually called (in my mind...) "The Way of the Great Is" (Taijito, or Tai Qi Dao...).
Notice first that it is contained within a circle. There can be nothing outside of the circle, as the Universe "Is" all-encompassing and everything within it must conform to its Laws (Tai Qi...). Therefore, everything inside of the circle can be considered a degree of two distinct components, which are called yin and yang. The picture is not to distinguish or separate male and female, good and evil or even black and white. The important idea is that there are components of yin and components of yang inside of everything.
When looking at the Taijito, the white fish, or the yang aspect, should be on top. That's because yang represents rising, elevation, ethereality, brightness, energy and busyness.
Yin is the aspect of dark, heaviness, motherliness, comfort, depth, sinking and sedation.
The picture demonstrates that there comes a preponderence of yin at one end and a predondernece of yang on the other. That is because the states of yin and yang are always in flux. This is the reason that the fish taper into each others' mouths: yin cannot exist without yang and vice versa. It is what makes the circle complete. In fact, since yin depends on yang for its existence, it may be said that they literally feed on each other in that yin consumes yang and yang consumes yin. That is how the universe "moves." So when you see the shrinking tail, believe that it means one is consuming and thriving off the other.
But...the fish has an eye! There is where the actual "balance" is in the Universe.
It means, since the two aspects require each other to survive, that yin lives inside of yang and yang lives inside of yin and are the seeds of opposite that generate movement from within.
It is what Whitman meant when he said, "I pass Death with the dying, and Birth with the new-washed babe and I am not contained within my hat and boots." He didn't know about the Taijito at the time, of course. :D
Now that we can see the picture in our minds eye, and knowing what we know about the alternate movement and internal-consumption between yin and yang, the picture starts to move, starts spinning. As it spins, ever faster and faster it seems, the distinction between the two aspects begin to blur. The back fish and the white fish meld to grey and eventually even the eyes fade into entropy, too...
which brings us to the Second Law of Thermodynamics. Funny thing is, the Chinese didn't know about that, either.
:D
We can't all be giants pee-wee. Bruce being a part of ZH demonstrates a degree of good intent.
He at least gives you a peak at the inside game.
Please fart more. It's cold as hell in Seattle!
You will have to trust me, size has nothing to do with name, and nor do contrary opinions have anything to do with the inside game.
I have a lot more than a peek, which is why I'm calling the spades.
I'd love to help the fine folks in Seattle with the weather, but remember I'm just a participant, what can I ever do to help...
So, if I see many fellow employees routinely shoplifting and i say nothing so I don't rock the boat just before bonuses does that complacency keep me innocent with regards to my responsibilities? As long as it's "systemic?"
What's he supposed to do? Go work at Mcdonald's? Bruce isn't ripping anyone off. Bruce doesn't make the rules. He has a job. He is essentially (as I understand it) an analyst. Think NFL announcer with some skin in the game. He is no more or less guilty of wrongdoing than any other citizen under the thumb of a system in which they are merely players, not designers.
Unless you happen to be Amish (or an equivalent outlier). You participate in this system as well and by your implied reasoning would be just as guilty as Bruce.
(via participation).
Participation? I guess my farts do contribute to global warming so you have a point.
Where is Bruce Krastings using his influence? To complain on zero hedge about all the money he's making to you minions...
The man that really believes this stuff would be out in front with a plan to make right what is wrong to protect "those he adores" from the system they are a part of. It's no secret that real leadership is by example, not commentary.
Damn those bonuses, they are accidentally up again! Well, the business is dirty but the money is clean which makes cheating and stealing and lying about subprime mortgage exposure all okay.
I'd believe him if TARP bonuses never happpened, or the industry had even one glimpse of contrition from any real participant, or even the law being followed with forclosures -- nope! Always, "the system's" fault, which makes it easy to call out the bullshit and self-interest.
FYI, I left Wall Street in 1995. I have not had a pay check much less a bonus since then. Don't blame me for what happened in the 17 years since I have been playing for the other team. I have been bitching (and writing) about things for years.
Thanks for your response. All I have to go on is what you write.
That being said, in a prior post you used present tense about trading in derivatives, betting against countries, etc. which lead me to believe that you still had chips on the table. I stand corrected if you meant institutional, but something tells me you still have chips on the table.
So, why isn't Bruce Krasting using his grandfather-status to influence the forces of good (beyond words)?
The reality is the finance-bus is buried in the mud. Regardless of how it got here, all the words in the world don't substitute for a real push.
I said I do not work for any bank or any type of financial firm. I did not say I don't invest in the markets. I do. That is how I make a living. I got to eat??
Krasting: "I got to eat."
Reminds me of when I bought my first car around 1991. My father went with me (paid for roughly 30% of the car and helped me through the negotiation) and when we made it clear that MSRP was basically a made up number pulled out of the air by the car makers, and we didn't give a damn what the MSRP was, we were going to pay a few hundred under the MSRP, the Jewish car dealer (who was obviously swimming in money) walked up to my father and me and said "Well, we have to pay the light bill here somehow". It was all my father could do to hold his laughter (I went ahead and cackled in his face, I was young and didn't give a shit). We got the price we wanted, and we didn't buy the crap add-ons (bullshit undercoating to protect the car's underside, which is just a ploy to gouge idiots) after we signed for the car either.
Moral of the story: Don't believe phony sob stories.
Well said. I spent many years in academia and DC. I saw plenty of good people in bad institutions. We think in general, but we live in detail, which is just another way of saying the kids like to eat.
Important post, but let's be clear about the bad guys. FASB tried to do the right thing on mark to market. The lawyers/politicians in the SEC threatened to take them out and have them shot, just like FDR's attempt to pack the supreme court when the truth pissed him off.
Auditing firms do nearly all of the work the SEC pretends to do, but without permission of their statist overlords, auditing firms can't exist, much less do the right thing. Government accounting is a cash basis/Micky Mouse/set of lies agreed upon, but FASB won't be allowed to say that in public either. The solution is an end to satist central planning.
+100
Even the generally astute ZH readers probably don't understand the facts well enough to realize the truth in what you say, Kaiser. Looks like the FASB is getting sued for something they did when they had a gun to their heads.
I think it is crap for you to insult Bruce. The guy is honest to a tee. Don't get all pissy and attack someone because they have played by the rules. I've been reading Mr. Krastings post for a long time and the guy is just trying to make sense of this shit (while making a living to support himself and those he most adores).
Please refrain from attacking the messengers?
I'm sure Bruce is insulted all the way to the bank.
In the meantime, a spade is a spade regardless if hurts some feelings.
You sir, are a true douchebag.
Bruce is an honest man who gives you his honest take on things. He calls it the way he sees it, and will both back his postions and admit his biases.
Quit blaming Bruce for being successful and go back to work. The fries are getting cold and the drive through is backing up.
Is that all ya got with tears in your eyes?
As long as we're calling a spade a spade: you're a fucking retard.
Now that made me laugh.
*yawn*
Isn't Bruce retired?
Bruce, bankers like yourself are government sponsored terrorists.
You illustrate another symptom of the same problem - unequal (dishonest) weights and measures for the bigger bonus.
FASB is another name for free-market fraud polish that you all hide behind while everyone else is robbed/extorted blind.
So tell me, when are you bankers going to start self-regulating?
In part you have answered your own question. The banksters are government sponsored.
They will self-regulate when (a) the government and the Fed will no longer bail them out, and (b) prosecutors begin to indict them for grossly negligent behavior or civil lawsuits for such are successful.
Don't hold your breath.
Accounting? Standards?
Would that be like austerity for failed banks and insurers and corporations?
Nah.
In Amerika we let individuals and families fail, and if they don't, we do our best to beat them over the head for being responsible and milk them and their kids for bailout ca$h.
Morality? Ethics? Quaint notions useful for oppressing the masses not for accounting or finance or banks or politicians certainly.
My, my...where does it end? Usually in bloodshed, but this generation hasn't learned that one, yet.
++
I originally thought that "they" could extend and pretend until 2015, now I'm not so sure that the end game won't be sooner. The sky is darkening with a flock of Black Swans.
Definitely a problem. Nice post. If we can't count on FASB it kind of turns the entire system into a joke. But also if Republicans are going to under-man and under-resource the SEC, what do they think will happen?? Especially with CEOs firing CFOs who refuse to write lies on the books.
You are an awesome useful idiot, but if you would like to widen your perspecitive a bit, google "Kanjorski lobbyist financial industry" and "Kanjorski threatens FASB" to find information relevant to political parties and this issue.
You mean the SEC that watches porn all day long, and issues blanket fraud exemptions to GM and other Friends of O--that SEC? Close it down.
You would watch porn all day long too if cocksuckers like John Boehner and Phil Gramm threatened to take away your funding if you actually did your job. What's the point of slapping GM and GE when after you do the guys sitting to your left and right of you are cleaning out their desks thanks to Republicans cutting off your funding. That's a major reason the market tanked in 2008 (derivatives fraud) in case you dumbshit Republicans were too busy watching airheads on CNBC telling you otherwise.
Dude. Your misplaced partisan anger isn't going to get you anywhere. Especially not here. Go home, take a deep breath, and when you realize that BOTH sides want to eat your lunch, come back and try again.
Scusi, but what is a "republican?"
Work backwards from the bottom line net income number and the accounting policies just fall into place.
The rules are different for banks & corp than for j6p.
If I want a loan, my net value is scrutinized. My home value fell which reduced my netvalue.
The very same bank carries my home on their books for the "old" value which is substantially more....
When are we going to have a level playing field?
Patent on accounting ?
I have lost last faith and hope in THE SYSTEM.
It is just an insane asylum, where some parasitic crooks try to fuck the other to the death end.
Does those parasites know, that killing the host kills parasite too ?
oops - still trippin' on those yolks.
Actually, the organic farm down the road from me sorts their eggs into some extra super jumbo category that generally consists of all double yolk eggs. The farmer tells me that those layers are less productive and would be culled from a commercial operation. He has customers that seek out the doubles!
Egg-gads! Well, just in case it was evidence of good luck karma, I'm going to buy 2 tickets for each lottery drawing for tonight. I'm half afraid I'll wake up with 4 nipples tomorrow but that's a small price to pay for hitting 2 jackpots tonight. :) :)
Don't count your nipples before they sprout.