New rule forces banks to recognise losses earlier

[dipsydoodle]

Source: Reuters

(Reuters) - Banks must make provisions on souring loans much sooner under a book-keeping rule that would apply a key lesson from the financial crisis to protect taxpayers.

Under existing accounting rules banks are not required to make provisions until a loss has occurred or there is clear evidence of impairment that passes a certain threshold.

The 2007-09 financial crisis showed that was far too late, when it then proved impossible for banks to raise fresh capital during the market meltdown, forcing them into firesales of assets that worsened the turmoil and ushered in state bailouts.

Leaders of the world's 20 major economies (G20) asked the International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) in 2009 to come up with a single global rule that recognises losses far earlier so that banks have more time to act.

http://uk.reuters.com/article/2013/03/07/uk-accounting-banks-idUKBRE9260JD20130307

Read more: http://uk.reuters.com/article/2013/03/07/uk-accounting-banks-idUKBRE9260JD20130307

[Dryvinwhileblind]

1. Rules? YGBFKM! More weapons grade BULLSHIT from the "elite".

Accounting Standards Boards? ANOTHER contradiction in terms.

[naaman fletcher]

2. So that banks have time to act?

so that banks have more time to act.

The banks know what their assets are worth. They have time to act.

The issue on reporting losses is not so that "the banks have time to act" but so that regulators and investors have time to act.

[dipsydoodle]

3. Yes but

When the the International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) set up and confirm the rules if the auditing partnerships ignore them it becomes the equivalent of them committing suicide. That's what happened in the case of Enron / Andersons.

[naaman fletcher]

4. yes of course

and this is a good thing, I just think the reporting in the article wasn't that great.

[blkmusclmachine]

5. Toothless, do-nothing posturing, from the DC elite,

to placate the masses. Will accomplish ZERO.