A little while back I wrote about how the new mark-to-model accounting rules, which allowed banks to inflate the value of their assets to whatever sum they desired, had caused a huge glut of foreclosed properties not being put on the market and artificially inflated banks’ worth. It seems that this is finally making some lawmakers and investors a little nervous, and they’ve prodded the FDIC into half-assed action. Today, the FDIC released a love letter to the banking industry, recognizing that the whole mark-to-model accounting is an “incredibly imprecise” mess and begging banks to be more honest—you know, because it’ll be good for all of us. The banks simply ignored this pathetic whining.
Bloomberg (8/3/09):
The letter reminds industry that loan-loss allowances “should be reflective of credit conditions that impact their portfolios,” LaJuan Williams-Dickerson, an FDIC spokeswoman, said in an e-mail. “Recognizing those conditions allows lenders to make good decisions and work with their borrowers, based on realistic economic circumstances.”
Tom Kelly, a JPMorgan spokesman, and Scott Silvestri, a Bank of America spokesman, declined to comment. Mark Rodgers, a Citigroup spokesman, andKevin Waetke, a Wells Fargo spokesman, didn’t return messages seeking comment.
The FDIC is basically acknowledging the existence of a shadow inventory. The four largest mortgage dealers— JPMorgan, Wells Fargo, Citigroup and Bank of America—have about $450 billion in home-equity loans. With prices dropping by a minimum average of 30%, that comes out to at least $150 billion in unreported losses and means that another bailout could be just around the corner. It also shows how bogus the banks’ recent profits are.
Read more:, Yasha Levine, What You Should Hate
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5 Comments
Add your own1. Tommy Jefferson | August 4th, 2009 at 1:23 pm
Regulations are written by the industries they regulate. Regulations are designed to protect the profits of those industries by preventing competition. Competition keeps businesses honest. Regulations do the opposite, they allow businesses to cheat.
Less government regulation results in more honesty. Reducing regulation reduces fraud.
2. Running up in Congress sayin' fuck it all! | August 4th, 2009 at 6:16 pm
I’m anti-imperial
anti-trust
anti-gun if the shit won’t bust
anti-corporate, they anti-my essence
anti-snortin’ them anti-depressants
but i’m not pro-poppin’ em;
i’m provocative
and pro-stoppin’ them FBI operatives
who professional at Black Man Pounce
and hand you a sentence that you can’t pronounce
I’m also anti-narco, anti-vice
911 marks the anti-christ
they anti-social, pointin’ M-16’s;
guess i’m anti-the-anti-nigger-machine
Proletarian, funkadelicparliamentarian
pro-revolt-in-the-21st-centurian
pro-running up in Congress sayin’ fuck it all!
but bring the people with you, that’s the protocol
This beat is joyful like jailbreaks
the whole world is anti-United Snakes
so check it out, anticipate the anti-venom
and move your antibodies to this revolution rhythm
we goin’ be fuckin’ with ’em
pro-union but most lost they bite
anti-muthafuckas-crossin’ a strike
take a look around and be for or against
but you can’t do shit if you ridin’ the fence.
3. DocAmazing | August 5th, 2009 at 10:54 am
Tommy J–
Regulations are only written by the regulated in dumb0fuck countries where Republicans and Reaganites handed over control to corporations. In countries with adult supervision, oversight is handled by people who don’t have massive conflicts of interest.
Being ass-raped by a corporation is no more pleasant than being ass-raped by a government; at least with the government I have some ballot-box feedback, while with the corporation I have none.
4. weldon rumproast | August 5th, 2009 at 12:18 pm
ok, i have to know who’s lyrics those are.
5. aleke | August 7th, 2009 at 6:31 pm
The Coup
The Coup fucking rule
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