VideoMarie Leone, CFO.com | US
May 1, 2008
- I told you so !?!
I agree that an "I told you so" from the FASB is more than a bit ill-placed..... If they were so concerned earlier about the implications of subprime mortgages, they should have created more disclosures and standards BEFORE the wave of defaults rather than being reactionary.
However, one other comment to Richard Bassett who wrote:
Did our friends at FASB say how many of these missives they issue a year or how much profile they gave to this particular issue? Hint, look at the numbering of this: FSP SOP 94-6-1 .
I think your reference to "the numbering" of the FASB Staff position is a bit meaningless. That number sequence means it is the first modification to the sixth Statement of Position written in 1994 and has no bearing on the number of standards issued in a year. The FASB has only issued thirteen pronouncements so far this year and twenty-two in the year that standard was written, which I consider to not be a significant amount.Posted by R. Morris | May 28, 2008 10:06 AM ET
- Will Rodgers didn't have to go to FASB to know this
You have to read an SOP from FASB to know that 'subprime' loans were not good?
Any thinking person, let alone a finance person that used his/her brain would know that 'low-doc' or 'no-doc' or 'liar-loans' were not credit worthy. When you hear mortgage talk shows discussing 'zero-down' or '110% loans' you know rotten investments are being sold to pension funds in Denmark.
Pre-FASB, pre-SEC, Will Rodgers said, 'I am much more concerned about the return of my money, than the return on my money."Posted by Matt Peiffer | May 22, 2008 2:54 PM ET
- An earlier and more fundamental warning
Please reference an earlier and more fundamental warning to the SEC and FRS relative to potential subprime problems
Comments on Release No. 34-49695,
File No. S7-22-04 (June 9, 2004)
http://sec.gov/rules/policy/s72204/saboyko060904.pdf
http://www.federalreserve.gov/SECRS/2004/June/20040610/OP-1189/OP-1189_1_1.pdf
Stephen A. BoykoPosted by Stephen Boyko | May 22, 2008 2:17 PM ET
- Take responsibility
I have a close relative in the mortgage business, managment of loan production for two of the largest loan originators in the last decade. He knew, and talked about well before 2005, the dangers of zero-down teaser rate ARMs with the initial interest rates set 4-5 points under the index. He also knew they were mixing sub-prime loans in with the standard loans in packaging the securitization. Don't you think the finance chief's knew, or should have known, the risks and the potential losses? Too busy to pay attention to the PCAOB releases is not an excuse.
Posted by Rick Richman | May 22, 2008 1:22 PM ET
- don't beat Bob up
let's focus on the real issues......you guys are making me ill
Posted by rick macchiarulo | May 22, 2008 12:36 PM ET
- Please!
It is very sad that the FASB organization would go on record saying I told you so about the sub-prime problem as if this statement justifies their existence and their knowledge of the issue. If there was real awareness and no effort was made to make the public aware of their real feelings, that is a real shame. Hundreds of FASB opinions are written with many never materializing into anything of significance. If they had knowledge of the issue, it should not have been hidden within the text of a six-page document that is written in terms that most individuals would never real or understand. Items of significance need to be written in terms that are easily understood with an estimate of the magnitude of the problem included. After reading the statement referenced on this subject, makes me understand why many in this organization are looked at as ?bean counters? and not real financial people. Reporting without the required analysis and speaking in terms that business leaders can understand will not get the job done. Understanding the data is a requirement for being effective.
Posted by Robert Donald | May 5, 2008 9:09 AM ET
- Give me a Break!
Did our friends at FASB say how many of these missives they issue a year or how much profile they gave to this particular issue? Hint, look at the numbering of this: FSP SOP 94-6-1 . I'll bet that the some analyst did this note and that nobody in the senior ranks of FASB paid any attention to this themselves before 2008.
The next time I want to know when someone has screwed up a market I won't be consulting three year old FASB circulars written in Orwellian language; I will be looking to see where hedge funds are placing their bets rather than consulting arcane FASB memos.Posted by Richard Bassett | May 2, 2008 10:38 AM ET
- Why, then, are we only hearing about this now?
It is always easy to sit on the sidelines and say "I told you so" after an event, but shouldn't Mr. Hertz have made sure that the public was made aware of the gravity of the situation at the time when the paper was issued (and to whom was the paper issued?)?
The paper strongly suggested "that additional disclosure was required by a variety of accounting standards for many of the subprime scenarios it described".
So who is determining what is newsworthy these days? Aren't shareholders entitled to know the issues being highlighted when they are being highlighted by FASB? Perhaps the reports should also be made public through CFO.com in the future?Posted by Kathleen Phillips | May 1, 2008 9:52 PM ET
- If Politicians only Paid attention
Perhaps if folks in the senate and in congress as well as politicians like Hillary Clinton paid as much attnetion to the industry facts and news they wouldn't be so quick to point the finger at the entire "broker"/ "correspondent lender" group of professionals and start looking at the the primary issues that caused this major market meltdown.
Next they should really look at who they are blaming inflated housing values on. When they do they should look at Builders that own their own mortgage and appraisal companies and provide upgraded appliance or pool packages to folks to incentivize them to do mortgages with them that have higher interest rates and inflated values that came from their appraiser building the cost of the upgrades and incentives and the profit into the price of the home to package and close these new housing start completions in, yet another ticking time bomb. Case and Point: Look at how the recently proposed legislation for the HVCC may affect others inthe industry) do not solve the problem and in fact severely punish agents, mortgage brokers, MAI & other certified and approved appraisers, and ultimately consumers. If there ever was a case of the cure being worse than the disease, this is it.
In the case of subprime mortgages and the deterioration of this product mix you have bankers not paying attention to the FASB because they were focused on bottom lines and how the FASB's warning would potentially affect their lucrative smoke screan of off-balance sheet voo doo. Don't get me wrong off-balance sheet finance and accounting have their merits but this is definitely a situation where the people in power have not paid attention to the experts and now they are blaming everyone but themselves for the issue and jumping on the band wagon to crucify others that have also been giving warnings. This, again, is tantamount to "throwing the baby out with the bath water".Posted by Jr Keeling | May 1, 2008 6:33 PM ET
