QuoteOriginally posted by: FermionQuoteOriginally posted by: BullBearDexia statement:"2Q11 pre-tax income marked by EUR -4,193 m one off items mainly related to: Acceleration of asset disposals announced on May 27th2011, leading to losses on assets sold and to the reclassification of assets to the IFRS 5 category of ?non current assets and disposal groups held for sale?Participation in the IIF* Greece assistance programme leading to impairments on Greek government bonds at a 21% loss rate; EUR 1.8 bn of bonds (nominal value) falling within the scope"It looks like Dexia, under the allowance of its Regulator, Risk Managers and Auditors, wasn't taking MTM losses into consideration in their financial disclosures to investors neither was Dexia taking market values into consideration regarding their capital ratios requirements. Dexia's Board, auditors and employees ended up disclosing a one-time bullet loss (just last quarter) and leaving the bill to creditors or taxpayers... So... you pile up your mess during 2 or 3 years and hide that information, you keep earning nice wages and bonuses, and in the quarter immediately preceding bankruptcy you recognize all your losses accumulated during the last years.That's why it is so important to enforce "mark-to-market" accounting rules for all tradeable assets. And if there is no market, then the market value is nil. There's nothing to stop banks from also specifying their model valuations as long as they don't substitute them for "mark-to-market".However, what we have seen in the US since 2008 has actually made matters worse. At the end of March 2009 Congress announced new rules, after extensive lobbying by the banks, to facilitate more fraudulent accounting not less. This was immediately followed (surprise, surprise!) by a new stock market bubble.I don't agree with changes to MTM rules. It's a fraud. I can only defend a short-term suspension due to massive panic like in 2008. The problem is that the lobbies take advantage of exceptions to introduce long-term rules.Anyway, those rules can be terminated in court since they do not follow the general accepted principles of Accounting. Congress powers are not superior to the Supreme Court powers when the laws printed by Congress violate the principles, the moral and the philosophy of the law. Those guys have no respect for Prudence, Transparency, and symmetric disclosure to all stakeholders. Any Auditing firm that accept those rules knows that they're violating the general accepted principles of Accounting and hence should demand changes to the accounting of the firm otherwise they'll be committing fraudulent accounting.There's also an international accounting standard (IFRS 32) that demands all assets to be marked to market or marked to model and disclosed in an Annex but Bankers and Auditors seem to not care about that rule. So, Dexia's Board, their risk managers, internal & external Auditors, and their regulators are also
Last edited by BullBear
on October 12th, 2011, 10:00 pm, edited 1 time in total.