Bernanke Defends Policies on Inflation, Mark-to-Market

May 19, 2011 by · Leave a Comment
Filed under: Uncategorized 

the central bank’s purchasing of bonds to help aid the United States’ economic recovery. In a House Financial Services Committee hearing, Bernanke backed up his additional decision for “quantitative easing.” “What we’d like to see is a sustainable recovery. We don’t want to see the economy falling back into a double dip or to a stall-out,” he said.

Seeking Alpha writer Pater Tenebrarum recently shared an interview between Bernanke and Westwood Capital manager Dan Alpert at Bloomberg. In the interview, Alpert grills Bernanke on the nearly $3 trillion on mortgage loans that remain on the books of the United States banking industry. With many of these mortgages “under water,” Tenebrarum and others express concern that the suspension of mark-to-market rules in 2009 serves only as a patch until theseunderwater loans get better. Tenebrarum notes that this is the same strategy used in the past two decades by Japan, which has produced the “well-known results of never-ending economic stagnation and a fiscal debt that has grown to the sky.”

Bernanke remains committed, however, to more than $600 billion in treasury purchases.

4th Quarter Earnings Almost Complete, Appear Strong

May 6, 2011 by · Leave a Comment
Filed under: Financial Crisis, Market News, Uncategorized 

With 4th quarter financial reporting over 95% complete, reports appear to be strong from this earnings season. Zacks Investment Research has received reports from 479 firms and is awaiting the results from the straggling 5%. The investment research company noted that typically, the early-reporting firms perform much better than those filing reports last, but that the firms reported represent almost all of the potential earnings for 4th quarter. Thus, the remaining firms are not expected to have much of a negative effect on the overall earnings in 4th quarter.

Total net income has risen a very strong 29.6% versus the same quarter one year ago. Zacks points out that significant growth came from the financial sector, which posted huge net margins. The researchers did caution that the quality of the reports versus prior years can be subject to interpretation due to the absence of mark-to-market accounting. Much of the growth might be attributed to firms setting aside fewer reserves for bad debts compared to a year ago, said Zacks.

Incoming IASB Chief Says Accounting Rule Makers Must Modernize

April 29, 2011 by · Leave a Comment
Filed under: Uncategorized 

At the opening remarks of the European Commission conference on financial reporting, incoming International Accounting Standards Board (IASB) chairman Hans Hoogervorst said that accounting rule-setters should strive to remain independent from business but remain sensitive to the community’s concerns. Hoogervorst, who succeeds Sir David Tweedie in June, said the IASB would review its governance structure to increase transparency. “It’s very important that we develop a governance structure that is more inclusive,” he told delegates at the conference in Brussels. “At all costs we should avoid the perception that IFRS (International Financial Reporting Standards) is dominated by a small group of nations.”

One critical issue facing the board is the topic of fair value accounting, which Hoogervorst discussed. Defending the controversial accounting principle, Hoogervorst said that firms who applied fair value rules “came out of the crisis a lot better than other firms,” because the were able to “get rid of poisonous assets at a much earlier stage.”

Carmichael: Convergence, Fair Value Are Most Important FASB Tasks

April 27, 2011 by · Leave a Comment
Filed under: Uncategorized 

Douglas Carmichael, standing member and former chief auditor of the Public Company Accounting Oversight Board (PCAOB), recently spoke to Crain’s New York Business about the upcoming challenges facing the Financial Accounting Standards Board (FASB) and the accountancy profession in general.

Carmichael recognized the steps that the Sarbanes-Oxley Act had made in making auditors more diligent, moving the spotlight away from accountants in the most recent financial crisis – something that was not the case in the Enron and WorldCom scandals. He also spoke on the FASB’s current issue of juggling convergence with the International Accounting Standards Board (IASB), replacing former chairman Robert Herz, and tackling the most important and heated issue in recent history, the proposed expansion of fair value accounting.

Carmichael said of fair value accounting, “If you move too quickly and broadly into valuing assets at their fair market value, you risk sacrificing the reliability you get valuing them at historic cost.” Skeptical of the broad application of the rule, Carmichael continued, “Anything that makes tradeoffs between relevance and reliability concerning revenue recognition worries me. That’s because in the past, we’ve seen fraudulent reporting overwhelmingly due to misapplication of principles on revenue recognition.”

Carmichael was also cautionary of a rush towards IASB convergence. “My belief is the new FASB chairman should resist pressure for convergence too quickly and only make steps that result in high-quality accounting,” he said.

SEC Focuses on IASB Funding

July 14, 2010 by · Leave a Comment
Filed under: IASB, Uncategorized 

Jim Kroeker, Chief Accountant of the U.S. Securities and Exchange Commission, says efforts are now focused on securing funding for the International Accounting Standards Board (IASB). The IASB writes the International Financial Reporting Standards (IFRS) that are used by more than 100 countries, which may soon include the U.S.
“A stable broad-based funding system with a diversity of capital market participants providing ‘no strings attached’ funding is of great importance to establishing a structurally sound international standards setter,” Mr. Kroeker said to an accounting conference at Baruch College in New York.
Mr. Kroeker’s comments come as political pressure on accounting rule-makers mounts worldwide. Last year, some in the European Union threatened to make their own changes to accounting rules if the IASB did not immediately adjust mark-to-market accounting rules.

Next Page »