Bank Lending Archives - Page 5 of 9 - Emile Woolf writes

If management breaks the law, don’t penalise the shareholders

Most penalties for financial wrongdoing are levied on institutions rather than the inventive executives who master-mind these grubby manoeuvres. Regulatory authorities themselves do not benefit from the fines they collect, now amounting to serious money – over £500 million in this year alone. Apart from relatively modest retentions to cover regulators’ costs, the money is […]

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Loan book valuations – accounting standards’ greatest challenge

  The Parliamentary Commission on Banking Standards recommended that the “expected loss “ model should replace the existing  “incurred loss” model in IFRS – in other words, that the concept of “prudence” should be reinstated in the accounting framework. In support, the European Parliament has instructed the European Central Bank to undertake stress tests on […]

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Sloppy auditing has its consequences – just look around you

My repeated warnings to auditors that compliance with IFRS does not guarantee accounting truth and fairness appear to have struck a resounding chord in high places: the House of Lords, to be precise, where the Parliamentary Commission on Banking Standards debated the Bill on banking reform, now enacted by Royal Assent. In Hansard for 23 […]

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Correspondence with Patrick Baron on the role of money & wealth transfers

From Pat Baron: “Emile, Even Germany is not immune to the predations of the euro.  I keep pointing out that German exporters benefit from euro credit expansion, but at the expense of all other Germans.  This is one reason that Germany is reluctant to put an end to the euro mess…the exporters and their constituents, workers, […]

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Auditors, wasted loans, currency wars… and gold

I noted last month that the record of auditors’ ability to assess the worth of banks’ loan portfolios is singularly uninspiring. In the US the Securities and Exchange Commission is actively pursuing auditors who issued clean opinions after accepting management’s assurances of worth, followed by massive bailouts. Yet any meaningful audit is impossible when supposed […]

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Auditing banks’ toxic debts

AUDITING BANKS’ TOXIC DEBTS Ever since the financial markets registered their massive tumble in 2008, when Lehman Brothers was left to drown in its swamp of toxic debts, banks’ managements, regulators, rating agencies and auditors have been muttering that banks must rebuild their balance sheets in line with successive Basel capital adequacy criteria. Their auditors, […]

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Competition amongst auditors – not the answer

Have auditors learned more from the 2008 financial crash than economists? The high priests of the dismal science refuse to recognise that the world has changed, though their discreditied theories continue to collapse about their ears.  Any serious penetration of the causes of collapse are not in the university syllabus, which now reads more like […]

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Hiding the truth with complexity: trust your own reason

When I started writing for this magazine over 40 years ago the editor was a wise old owl called Geoffrey Holmes. During a conversation on some thorny accounting controversy Geoffrey would slyly suggest that I tackle it in my next article. It was no use suggesting a different subject – he would simply look at […]

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Standards can obscure the simplest concepts: try ‘true and fair’

UK Companies Acts since 1947 have stipulated that audited accounts of companies should give a ‘true and fair view’. After 66 years the meaning of that elusive formula continues to be hotly debated by accounting bodies, regulators, representatives of investors and pension funds, civil servants and politicians. Prior to that time the Acts used the […]

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Sanity will return – In its own time

Everyone knows that the world’s economic woes are soluble. Every leader acknowledges the blessings of free trade, low taxes, sound money and less regulation. Yet their actions, as ever, speak louder than words and somehow achieve the precise opposite. Take “free trade”. It allows cross-border commercial transactions to take place between willing traders unimpeded by […]

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