CFO.com has had some cracking material the last few weeks. This one: Former FDIC Chief: Fair Value Caused the Crisis goes down as one of the best for exposing yet another accounting dope. This time William Isaac, one time chairman of FDIC and now – wait for it – consultant to banks:
The devastation that followed stemmed largely from the tendency of accounting standards-setters and regulators to force banks, by means of their litigation-shy auditors, to mark their illiquid assets down to “unrealistic fire-sale prices,” the former FDIC chief asserted. The fair-value rules “have destroyed hundreds of billions of dollars of capital in our financial system, causing lending capacity to be diminished by ten times that amount,” he said in his prepared remarks.
It takes a very special kind of idiot to make these kind of assertions and think they’ll get away with it. It takes one that is intellectually dishonest. Check out the comments to the post. There’s some sparkling material for later historians. I particularly liked this from shann giv:
This is the story I will be telling my children one day.
Once upon a time in American history…
There were a million losers who borrowed money for a mortgage and couldn’t make their payments.
The banks who lent the money knew that these people were losers and wouldn’t ever be able to pay it back.
And the Clinton Administration set the whole thing in motion by proposing that more people- losers who couldn’t afford them- own their own homes. The dead-beats didn’t make their payments. Banks went bankrupt and my tax dollars (which should be funding new schools and better health care) helped bail out these self-centered morons.
To top it all off- for some crazy reason, certain people blamed the profession of Accounting- instead of blaming the people involved for the big mess.
And that, my friends, is how it all went down.
