For the good of investors, FASB should withdraw its loss contingencies disclosure draft

October 20, 2008

I have long suspected that “protecting” America’s financial statement users from “bad” financial statements is a futile task.  The FASB’s efforts at revamping its Statement 5, on loss contingencies, confirms the suspicion.  It’s not that we have too many bad financial statements.  It’s that the users — including some who hold advanced business degrees and […]

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Citigroup bows out of Wachovia talks . . . finally

October 9, 2008

The Wall Street Journal is reporting this evening that Citigroup, because of what I suspect was its own negotiating faux pas, is now throwing in the towel on talks with Wells Fargo over the purchase of at least part of Wachovia Bank:

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Why is Judge Ramos pushing a Wachovia-Citigroup marriage?

October 6, 2008

Under ordinary circumstances, a fight between Citigroup and Wells Fargo over Wachovia would be a good thing, benefiting Wachovia’s shareholders by pitting two prospective buyers against each other in a bidding war. Hence this Sunday statement by Wachovia: “Wachovia believes its agreement with Wells Fargo is proper, valid and is in the best interest of […]

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Wachovia responds: Citigroup violated confidentiality agreement

October 5, 2008

Citigroup appears to have even less of a claim on Wachovia than I previously thought, on the basis of transaction documents posted late Sunday night by the New York Times (copy below the jump). The documents include an affidavit of Wachovia CEO Robert Steele and the Wachovia-Wells Fargo merger agreement. It appears, from these documents […]

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Wachovia-Citigroup letter: Non-binding agreement to agree

October 5, 2008

Citigroup’s “agreement” with Wachovia appears to be a bust. If the $2.1 billion deal is documented by nothing more than the letter posted at Clusterstock (key excerpt below), Citigroup shareholders should get set for disappointment: the “non-binding” term sheet apparently involved a $42 billion contribution by the federal government. Citi’s reported $60 billion lawsuit against […]

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Wachovia deal says “fair value” is higher when the government stays away

October 3, 2008

Great news just in from Wachovia: It’s “fair value” rose by an astonishing 750 percent overnight, to $15.1 billion from $2.16 billion. That’s right. Yesterday at this time, Wachovia was supposedly worth only $2.16 billion — in the eyes of government regulators who were trying to force it into an arranged marriage with Citigroup. Turns […]

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Senate bailout: Where’s the oversight?

October 2, 2008

If you buy the notion that a bank bailout is necessary — and many of us do not — the bill passed last night by the Senate is seriously deficient in terms of governance and oversight.  It should, therefore, be rejected by the House.

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Troubled Senate bailout plan: What’s a troubled asset?

October 1, 2008

109 pages were not enough to drown dissent in the U.S. House, but maybe an entire ream will be. The latest Senate bank bailout bill fills 451 pages. Despite its length, it features stunning gaps in logic. What else should we expect from roughly 350 pages of legalese written between Sunday and Wednesday afternoon? Example: […]

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FASB 157 Update: JP Morgan defends mark-to-market accounting

September 30, 2008

Some commentators — including Lynn Turner — have pointed out that Section 132 of the bailout draft appears to be an effort by Congress to empower the SEC to immediately suspend mark-to-market accounting, bypassing normal due process rule making with an “order” that would not require public notice or comment.

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Memo to Congress: SEC already has power to abolish mark-to-market

September 30, 2008

Fair value accounting is coming under fire, now, from various directions including Newt Gingrich and a number of banks and economists. Apparently, some banks (though not all) think it unfair that Wachovia should be bought for $2.16 billion when it’s balance sheet reports $75.1 billion in net assets.

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