SEC To Propose Rule Making End Of Quarter Window Dressing For Banks Just That Little More Difficult

Developing news that the SEC is proposing a rule that will make EOQ window dressing, along the lines of the Repo 105 transactions that made so many headlines yet resulted in absolutely no criminal convictions, more difficult. We will bring you more some time in 2394 when this proposal actually becomes enforced, but in the meantime here is our chart that shows just how much of a pervasive phenomenon this is among the Primary Dealer community.

Readers can find out more about this here: End Of Quarter Primary Dealer Asset Window Dressing Games Continue. We will update this chart in the first week of October when the Q3 window dreassing game is complete. We expect another 30 billion up and down swing as banks "fix" their capitalization ratios just in time for their 10-Q filings.

More from Bloomberg:

U.S. regulators may make it harder for companies to mask debt after Lehman Brothers Holdings Inc. was accused of misleading investors by temporarily moving assets off its books.

U.S. Securities and Exchange Commission members will vote today on rules that would expand what firms must disclose about short-term borrowing arrangements. Under the proposed rules, banks would have to tell shareholders the maximum amount of debt they had each quarter and the average amount of debt.

The rules target what SEC Chairman Mary Schapiro has described as “window dressing,” in which companies use accounting maneuvers to reduce borrowing at the end of quarters when they publicly report debt levels to investors.

Lehman filed the biggest bankruptcy in history on Sept. 15, 2008, exacerbating a global credit crisis following the collapse of the U.S. mortgage market. Bankruptcy examiner Anton Valukas wrote in a March report that Lehman executives tried to hide the New York-based investment bank’s true financial picture by moving $50 billion of assets off its books and accounting for the transactions as sales.