11/6/09
OMG!!!! Call your representatives NOW!!!
PELOSI: Buy a $15,000 Policy or Go to Jail
JCT Confirms Failure to Comply with Democrats’ Mandate Can Lead to 5 Years in Jail
Friday, November 06, 2009
Today, Ranking Member of the House Ways and Means Committee Dave Camp (R-MI) released a letter from the non-partisan Joint Committee on Taxation (JCT) confirming that the failure to comply with the individual mandate to buy health insurance contained in the Pelosi health care bill (H.R. 3962, as amended) could land people in jail. The JCT letter makes clear that Americans who do not maintain “acceptable health insurance coverage” and who choose not to pay the bill’s new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years.
In response to the JCT letter, Camp said: “This is the ultimate example of the Democrats’ command-and-control style of governing – buy what we tell you or go to jail. It is outrageous and it should be stopped immediately.”
Key excerpts from the JCT letter appear below:
“H.R. 3962 provides that an individual (or a husband and wife in the case of a joint return) who does not, at any time during the taxable year, maintain acceptable health insurance coverage for himself or herself and each of his or her qualifying children is subject to an additional tax.” [page 1]
- - - - - - - - - -
“If the government determines that the taxpayer’s unpaid tax liability results from willful behavior, the following penalties could apply…” [page 2]
- - - - - - - - - -
“Criminal penalties
Prosecution is authorized under the Code for a variety of offenses. Depending on the level of the noncompliance, the following penalties could apply to an individual:
• Section 7203 – misdemeanor willful failure to pay is punishable by a fine of up to $25,000 and/or imprisonment of up to one year.
• Section 7201 – felony willful evasion is punishable by a fine of up to $250,000 and/or imprisonment of up to five years.” [page 3]
When confronted with this same issue during its consideration of a similar individual mandate tax, the Senate Finance Committee worked on a bipartisan basis to include language in its bill that shielded Americans from civil and criminal penalties. The Pelosi bill, however, contains no similar language protecting American citizens from civil and criminal tax penalties that could include a $250,000 fine and five years in jail.
“The Senate Finance Committee had the good sense to eliminate the extreme penalty of incarceration. Speaker Pelosi’s decision to leave in the jail time provision is a threat to every family who cannot afford the $15,000 premium her plan creates. Fortunately, Republicans have an alternative that will lower health insurance costs without raising taxes or cutting Medicare,” said Camp.
According to the Congressional Budget Office the lowest cost family non-group plan under the Speaker’s bill would cost $15,000 in 2016.
JCT Confirms Failure to Comply with Democrats’ Mandate Can Lead to 5 Years in Jail
Friday, November 06, 2009
Today, Ranking Member of the House Ways and Means Committee Dave Camp (R-MI) released a letter from the non-partisan Joint Committee on Taxation (JCT) confirming that the failure to comply with the individual mandate to buy health insurance contained in the Pelosi health care bill (H.R. 3962, as amended) could land people in jail. The JCT letter makes clear that Americans who do not maintain “acceptable health insurance coverage” and who choose not to pay the bill’s new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years.
In response to the JCT letter, Camp said: “This is the ultimate example of the Democrats’ command-and-control style of governing – buy what we tell you or go to jail. It is outrageous and it should be stopped immediately.”
Key excerpts from the JCT letter appear below:
“H.R. 3962 provides that an individual (or a husband and wife in the case of a joint return) who does not, at any time during the taxable year, maintain acceptable health insurance coverage for himself or herself and each of his or her qualifying children is subject to an additional tax.” [page 1]
- - - - - - - - - -
“If the government determines that the taxpayer’s unpaid tax liability results from willful behavior, the following penalties could apply…” [page 2]
- - - - - - - - - -
“Criminal penalties
Prosecution is authorized under the Code for a variety of offenses. Depending on the level of the noncompliance, the following penalties could apply to an individual:
• Section 7203 – misdemeanor willful failure to pay is punishable by a fine of up to $25,000 and/or imprisonment of up to one year.
• Section 7201 – felony willful evasion is punishable by a fine of up to $250,000 and/or imprisonment of up to five years.” [page 3]
When confronted with this same issue during its consideration of a similar individual mandate tax, the Senate Finance Committee worked on a bipartisan basis to include language in its bill that shielded Americans from civil and criminal penalties. The Pelosi bill, however, contains no similar language protecting American citizens from civil and criminal tax penalties that could include a $250,000 fine and five years in jail.
“The Senate Finance Committee had the good sense to eliminate the extreme penalty of incarceration. Speaker Pelosi’s decision to leave in the jail time provision is a threat to every family who cannot afford the $15,000 premium her plan creates. Fortunately, Republicans have an alternative that will lower health insurance costs without raising taxes or cutting Medicare,” said Camp.
According to the Congressional Budget Office the lowest cost family non-group plan under the Speaker’s bill would cost $15,000 in 2016.
Utter fucking BULLSHIT..... (sigh)
Civil War In Corporate America: Banks Battling The Chamber On Accounting Rules
Amid the ongoing financial regulation overhaul, the banking industry is hoping to pull off a quiet power grab that has eluded its grasp since the Great Depression, by stripping the independence of the board that sets financial accounting standards.
The move could effectively let banks set their own accounting standards in rough economic times.
Astonishingly, at a time when the public is crying out for greater regulation to limit excessive risk-taking by financial institutions, the banks are trying to get Congress to agree that the next time there's a big downturn, they should have the ability to alter their accounting standards -- essentially, fudge the numbers -- so that the public and investors won't be able to tell how insolvent they really are. By ignoring their declining asset values, they can avoid the standard requirement of raising more capital.
The mechanism is contained in an amendment set to be introduced in mid-November by Rep. Ed Perlmutter (D-Colo.) that would move final authority over the Financial Accounting Standards Board (FASB) from the Securities and Exchange Commission to a new body, a so-called "oversight" board, that would include the officials charged with managing systemic risks to the financial markets.
[UPDATED: Scroll down for the legislative language, which surfaced Friday and goes even further than suspected.]
These regulators would have the authority to override FASB's accounting guidelines by taking into account economic conditions.
The move is so radical that it has split corporate America. The bankers and members of Congress who support it have earned themselves an unlikely enemy: the U.S. Chamber of Commerce.
A typical business or investor, after all, prefers honest, independent accounting, because they buy and sell real things based on real value.
Story continues below
"Washington isn't thinking straight," said Josh Rosner, managing director of Graham, Fischer & Co, a New York-based financial analyst who advises regulators and institutional investors. "Financial statements are for the benefit of investors."
Indeed, allowing banks to alter accounting standards when they run into trouble is incentive to take more risk and, in essence, institutionalizes fraud. The regulators would now be under enormous political pressure -- and sometimes under direct orders -- to allow banks to remain in business long after they've become insolvent, in the hopes that things will turn around and they'll grow again.
And rather than stabilize the system, removing accounting independence destabilizes it in the long run, as investors and other banks have little confidence in the veracity of financial statements.
Perlmutter told the Huffington Post that under his proposal, the FASB "would stay with the SEC, but in instances where an accounting procedure or a way it's being implemented poses a threat to the financial system by exaggerating what's going on -- is pro-cyclical to a point that it, too, threatens the system -- then the financial regulator, the systemic regulator, could look in to it.
"For virtually every situation you can think of, there's no change, but [there would be a change] in the event that there's a threat to the system, like the dysfunctional market we had from October through March, and that the accounting procedures just didn't fit for a system where there was no market," Perlmutter said.
Leslie Oliver, a spokeswoman for Perlmutter, said backers of the amendment haven't been surprised at the opposition from certain sectors of corporate America.
"That's understandable for a company that has tangible assets," she said. Perlmutter said he has yet to hear directly from the Chamber.
That the banking industry finds itself in opposition to large sectors of the business community is evidence that a historic power struggle for control of the economy is underway.
The issue is stirring up the House Financial Services Committee. "It's caused a great deal of controversy," said committee chairman Barney Frank (D-Mass.). Frank has yet to take a position, he said, waiting until Perlmutter finishes meeting with members of the committee. "I told him I would wait until he finishes his conversations," Frank told HuffPost.
FASB is fighting to keep its independence. "The amendment that's being considered represents a shift that threatens to fundamentally challenge the objectives of financial accounting and politicize the process and harm financial system," said FASB spokesman Neal McGarity. "The mission of bank regulators is to ensure the safety and soundness of the banking system. We have a different mandate. That's why this is of considerable concern."
A powerful subcommittee chairman already opposes it. "I'm for keeping the independent FASB and I see no reason to change it," Rep. Paul Kanjorski told HuffPost.
The Chamber joined with investors and auditors in opposing the Perlmutter amendment.
From a letter sent to top committee members by representatives of the Center For Audit Quality; the Chamber of Commerce; and the Council of Institutional Investors:
"By placing the FASB under the jurisdiction of a structure charged with managing systemic risks to the financial markets, accounting rules will be viewed though the narrow lens of a few large companies from specific industries, rather than considerate of the applicability of financial reporting policies to over 15,000 public companies. Such a narrow focus can skew standards such that it makes understanding of transactions that businesses engage in on a daily basis more difficult and undermine the confidence of investors. We believe that the SEC has been and continues to be best suited to provide the oversight of the FASB for such a broad and diverse economy."
The American Bankers Association stands on the other side. "A Systemic Risk Oversight Council could not possibly do its job if does not have oversight authority over accounting rulemaking," top bank lobbyist Ed Yingling testified before the committee on October 29. "This is a major deficiency in the draft legislation. Accounting policies are increasingly and profoundly influencing financial policy and the basic structure of our financial system. Thus, accounting standards must now be part of any systemic risk calculation. To do anything less creates the potential to undermine any action taken to address a systemic risk. The Financial Accounting Standards Board should continue to function as it does today, but it should no longer report only to the Securities and Exchange Commission (SEC). The SEC's view is simply too narrow. Accounting policies contributed to the crisis, as has now been well documented, and yet the SEC is not charged with considering systemic and structural effects."
Yingling said the ABA "strongly supported" the approach taken by Perlmutter. "We thank Representatives Perlmutter and [Frank] Lucas [R-Okla.] for their foresight and leadership on this critical issue."
While the big banks would be pleased by the change, Frank said, the major push has come from community banks. Perlmutter said that his amendment was one of the community bankers' highest priorities.
Community banks are a popular and powerful political force in Congress. They didn't heavily trade the exotic products that nearly brought down the global economy; they received little in the way of bailout money; they don't give multi-billion-dollar bonuses; they tend to take more responsibility for loans that they issue; and they're generally respected members of the local community.
"Many members of the committee are supportive of community banks," said Rep. Maxine Waters (D-Calif.), one of the most progressive members of the committee and a subcommittee chair. "The big banks have been such an outrageous, scandalous story about how they operate and what they have done that we tend to want to support the community banks in whatever they ask us to do."
Waters told HuffPost she supports Perlmutter's amendment.
And winning the support of community bankers is in essence a necessary condition for Democrats who want to pass reform legislation through the Financial Services Committee. The Perlmutter amendment could be a way to win community banks over to the idea of a systemic regulator, a priority of the administration.
But working to loosen accounting rules could come back to hurt the Democratic Party: When the system goes down again, voters will want to know why.
When HuffPost asked Frank if Wall Street was pushing Perlmutter's measure, he responded emphatically.
"You have this caricature in your heads. You literally don't understand the way the world works," he said. "It's the community banks, the credit unions, who are driving this...Seriously, the community banks have the political clout here. Not the Wall Street banks."
Frank said the ABA was likely pushing for the amendment to win favor with community banks in its rivalry with the Independent Community Bankers of America.
Perlmutter agreed. "It's the community banks I've been working with. I'm not hearing it from the Wall Street guys," he said.
While the ABA has traditionally been associated with large Wall Street banks, it also represents small banks and is attempting to expand its membership by signing up more community bankers.
It works well for the big banks when their interests are aligned with the little ones, as is the case here. When their interests are not aligned, the little banks often win. Community banks, for instance, won an exemption from examinations -- though not the rules -- related to the Consumer Financial Protection Agency.
The ICBA wants to use its clout and the distrust of the big banks to move Perlmutter's amendment even further in their direction. "We're not buying and selling all the time. We hold a lot of things for the long term.... So we'd like to build in some additional sensitivity to community banks so would like to make that more explicit," Steve Verdier, an ICBA senior vice president, told HuffPost. "We're going to get in touch with [Perlmutter] to see if there are more things that can be done to tweak it in our direction."
Much of the debate around the amendment comes down to what is called the mark-to-market accounting requirement. Banks -- both big and small -- have long sought to avoid marking their assets down to market prices when those market prices are too low. Marking down the assets requires the bank to take a loss on its books, which then requires it to raise more capital by selling off assets at low prices. Banks claimed that in the fall, the market had frozen and that they couldn't sell assets. Another way of putting it is that the market price was lower than they wanted to accept.
Regardless, forced selling at low prices creates a downward spiral that banks and the GOP blame for the financial crisis last fall. The GOP called for a study of the effect of mark-to-market accounting on the economic collapse as part of the bailout. That report found the accounting practice did not cause the collapse. Either way, the banks hope to avoid that cycle when the commercial real estate market collapses and they find themselves with bad loans again.
"It's about easing the pressure to reduce the value of their assets in community banks, so they don't have to raise more capital," Frank said.
Asking accountants to change standards based on economic conditions could very well make their heads explode, however. It's not their job, they say, to keep the system from collapsing. It's their job to give honest numbers. If a company is bankrupt, it's bankrupt.
"Accounting standards are not policy," remarked one person involved in the fight.
But they have become policy. In the spring, Kanjorski's subcommittee hauled the head of FASB in for a hearing and demanded the number-crunchers change their mark-to-market standards within three weeks or Congress would do it for them. FASB's head pushed back during the hearing, saying that banks who called him asking for such a change were usually bankrupt fairly quickly.
"They practically dragged him into the hallway and beat him to death," said Rep. Brad Miller (D-N.C.), a committee member skeptical of the Perlmutter amendment.
Three weeks later, they eased their accounting rules. But it wasn't simple for the banks. Even with the intense congressional pressure, the change only sneaked by by a single vote and created tension on a board accustomed to a freedom from politics. The Perlmutter amendment would make such a battle unnecessary for the banks.
"There are a lot of banks that are in a lot of trouble and have a lot of exposure to commercial real estate," Miller said. "You can't fix that with accounting."
Rep. Alan Grayson (D-Fla.) fought a lonely battle last spring to stave off the loosening of the accounting rules and opposes this more dramatic shift, as well. Banks may have good reason to want to overstate the value of their assets, he said, and it may work for a time. But an economy can't be run indefinitely on imaginary numbers. "I enjoy reading fiction, but not in financial statements," he said.
UPDATE: HuffPost obtained a copy of the amendment language that is circulating among lobbyists. Perlmutter's spokeswoman confirmed its authenticity.
The amendment would empower the council overseeing FASB to "recommend to the SEC, either publicly or privately to take such action as is necessary, including but not limited to suspension, modification or elimination of such accounting principles, standards or procedures as they may apply to the stability of the financial system or the safety and soundness of financial companies, as a whole, for such duration as is reasonable and appropriate."
If the SEC doesn't follow the "recommendation," according to section (c) of the amendment, the council can order it to do so.
In other words, for the sake of financial stability, bank regulators could secretly order the "elimination" of accounting standards.
SEC. 1103. PRUDENTIAL OVERSIGHT OF ACCOUNTING PRINCIPLES AND STANDARDS THAT POSE SYSTEMIC RISKS.
(a) IN GENERAL.--In the event that any member of the Council believes that an accounting principle, standard or procedure threatens the stability of the United States financial system or companies, as a whole, then the Council shall investigate and by a majority vote, determine whether any corrective action, emergency or otherwise, is necessary to prevent or mitigate any adverse effects from such principle, standard or procedure. In the event that the Council determines that corrective action is necessary then, the Council shall recommend to the SEC, either publicly or privately to take such action as is necessary, including but not limited to suspension, modification or elimination of such accounting principles, standards or procedures as they may apply to the stability of the financial system or the safety and soundness of financial companies, as a whole, for such duration as is reasonable and appropriate.
(b) ADOPTION OF COUNCIL RECOMMENDATIONS BY SECURITIES AND EXCHANGE COMMISSION.--the Securities and Exchange Commission shall ensure that the prudential standards recommended by the Council are implemented within 60 days of the Council's recommendation or within such other time period specified by the Council.
(c) FAILURE TO ADOPT STANDARDS.--If the Securities and Exchange Commission fails to ensure that the prudential standards recommended by the Council are implemented within the time period specified in paragraph (b), the Council is authorized to direct that any recommendations issued pursuant to paragraph (a) be implemented for the purposes of generally accepted accounting principles."
UPDATE II: The SEC and the American Institute of Certified Public Accountants both oppose the amendment, as well. "Accounting should be about accounting, and not about anything else," writes SEC chair Mary Schapiro in a letter to Frank sent Thursday.
From a letter from the AICPA:
It is our understanding that Congressman Ed Perlmutter (D-CO) is considering language to amend the Financial Stability Improvement Act of 2009, which would undermine the independent accounting standard process as currently carried out by the Financial Accounting Standards Board (FASB). The American Institute of Certified Public Accountants (AICPA) strongly opposes this amendment and any attempt that would serve to undermine the independence of accounting standard setting. The purpose of public company financial reporting is to provide investors with clear, objective, and transparent financial information. This helps investors make informed investment decisions. Any attempt to divert financial reporting from its primary investor-focused objectives to other policy objectives with regard to financial institutions damages investor protections.
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Dan Dorfman: The Right Country for Old Men
The last time I caught up with our octogenarian was in the summer of 2007. At the time, Russell made what I thought was a remarkable call, telling me he thought there was a good chance "all hell could break loose."
mayorsusan: Mark your calendar for Greater Boca Raton Chamber of Commerce PULSE Kick-Off Party on November 11 from 5-8:00 pm at The Addison Boca Raton,
18 minutes ago from web
PSNBA: The Nov. General Board Mtg is this Monday (11/9) from 4:45 - 6pm at the Bremerton Chamber of Commerce.
36 minutes ago from TweetDeck
mickgregory: @GregWHoward The SF Chamber of Commerce has severed ties with the US Chamber of Commerce. Maybe SF should join the Cuba Chamber?
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- TiffanyHusseinBanned I'm a Fan of TiffanyHusseinBanned 343 fans permalink
Pox News now there's a tr@ shy news show.
Reply Favorite Flag as abusive Posted 06:55 PM on 11/06/2009
- AtomicallyCorrect I'm a Fan of AtomicallyCorrect 3 fans permalink
Yay free hand basket rides, hop on board everybody.
Reply Favorite Flag as abusive Posted 06:55 PM on 11/06/2009
- KriTiKiT I'm a Fan of KriTiKiT 28 fans permalink
thats just fine...
Reply Favorite Flag as abusive Posted 06:55 PM on 11/06/2009
- GEM-592 I'm a Fan of GEM-592 4 fans permalink
They've been able to get away with countless accounting deceptions all along, which is why the mess came on so fast in the first place. The legislation is an insult to public discourse, and to the electorate. Just another day in Congress.
Reply Favorite Flag as abusive Posted 06:55 PM on 11/06/2009
- FloydRTurbo I'm a Fan of FloydRTurbo 114 fans permalink
The week in review!
1) The DOW grew.
2) The economy grew.
3) Republicans have fewer congressional seats then when the week began.
Good week!
Reply Favorite Flag as abusive Posted 06:54 PM on 11/06/2009
- gmailliw I'm a Fan of gmailliw 184 fans permalink
Wow! My positive comments about Ron Christie and my comment about Tan cr edo being a Yankees fan was scrubbed two times
--Tiffany
========== ========== ========== ==================== ==========
Let that be a lesson about speaking iII of the Yankees.
Good decision, HP.
Reply Favorite Flag as abusive Posted 06:54 PM on 11/06/2009
- FinkeldorfFiddlestix I'm a Fan of FinkeldorfFiddlestix 21 fans permalink
Ladynaga
http://www.youtube.com/watch?v=la42R5MX_PE
Reply Favorite Flag as abusive Posted 06:54 PM on 11/06/2009
- ladynaga I'm a Fan of ladynaga 457 fans permalink
{{Hug}} Thank you so much, love you back
Reply Favorite Flag as abusive Posted 06:54 PM on 11/06/2009
- mightyhead I'm a Fan of mightyhead 8 fans permalink
Wouldn't it be more efficient to just pay our taxes directly to the financial industry? If we need any money for national defense, fixing roads, or plucking people off rooftops we could just borrow it back from them (for a reasonable fee of course).
So much of our taxpayer money is being wasted by funneling it back to the government in the form of lobbying when we could just have the financial industry write all the legislation. What? They already do that?
Never mind.
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- Brebro I'm a Fan of Brebro 4 fans permalink
How did our country get so F* ed up? Dems and Reps alike. Greedy BASTARDS!!!!!
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- lynjs I'm a Fan of lynjs 21 fans permalink
See, that's it. These guys haven't learned and never will. Just nationalize the banks and be done with it. Sometimes you have to go that extra mile before they believe that things must change.
Reply Favorite Flag as abusive Posted 06:52 PM on 11/06/2009
- hankledeep I'm a Fan of hankledeep permalink
Buy all the gold you can. But where to stash it? If your bank goes belly up can they grab your lock-box?
I'm thinking of burying my Golden Eagles in a coffee can out in the forest. With a little luck you can find it again in a pinch..........
Reply Favorite Flag as abusive Posted 06:51 PM on 11/06/2009
- therealjujubear I'm a Fan of therealjujubear permalink
you buy and store off-shore. less risk of confiscation.
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- gmailliw I'm a Fan of gmailliw 184 fans permalink
spartacus7502 wrote:
I could see this coming.
The inability of FASB to back away from mark-to-Market forced the feds to inject a lot of money into the financial system that could have been simply differed through accounting. The ability to take into account the lack of market for an asset, that has a revenue stream associated with it, is a financing tool that would have been quite handy during the crisis.
Selling into a flushing market and then taking the lower prices and marking down reserves is what nearly kiIIed us. The rule should revert the valuation to present value of the revenue stream that the underlying asset is generating, when no credible market exists. A credible market being a price that is within striking distance of the revenue streams present value.
========== ========= = ======== == ======= ========= ==== ===== ===== ==
Couldn't agree more.
I'm just trying to understand how mark to market is effective when the market is in crisis. How does one value an asset in an unstable market? And think of what it's like trying to value mortgage related securities when the market is in crisis?
Reply Favorite Flag as abusive Posted 06:51 PM on 11/06/2009
- Tough Love I'm a Fan of Tough Love 3 fans permalink
So basically, the banks want to stay overleveraged to maximize any potential profits, since there is absolutely no risk involved, because Government has taken on the risk on behalf of the taxpayers.
What could go wrong?
Reply Favorite Flag as abusive Posted 06:50 PM on 11/06/2009
- mcantwell I'm a Fan of mcantwell 298 fans permalink
That is an cute avatar
Reply Favorite Flag as abusive Posted 06:52 PM on 11/06/2009
- MikaS I'm a Fan of MikaS 266 fans permalink
It is.
: )
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- learntofly I'm a Fan of learntofly 189 fans permalink
:-0
Fanned.
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- rubygreen I'm a Fan of rubygreen 262 fans permalink
I love Markos Moulitsas (dailykos) and David Shuster!
Took Tancredo down!!!!
Reply Favorite Flag as abusive Posted 06:50 PM on 11/06/2009
- gmailliw I'm a Fan of gmailliw 184 fans permalink
Great stuff.
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- LooktotheLeft I'm a Fan of LooktotheLeft 546 fans permalink
HP,
To have muzzled us (w/ heavy moderation) with such an important thread as what happened at Ft. Hood yesterday is straight from Karl R*ove's playbook. I thought we were in a better place now. There were so many things to say during a "now missed" window of opportunity. Could you simply have looked the other way for 24 hours? Guess not.
My recommenda tion.....n ext time, put the heavy moderation on threads about banks. In the big scheme of things, no one really cares about them. Don't "heavily mod" something so human. Us little people known as posters, from coast to coast and from overseas, need catharthis too.
Reply Favorite Flag as abusive Posted 06:50 PM on 11/06/2009
- ladynaga I'm a Fan of ladynaga 457 fans permalink
Second that
Reply Favorite Flag as abusive Posted 06:52 PM on 11/06/2009
- mcantwell I'm a Fan of mcantwell 298 fans permalink
LN: Did you see...I've made it up to 298. :)
Reply Favorite Flag as abusive Posted 06:54 PM on 11/06/2009
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- forpeace I'm a Fan of forpeace 247 fans permalink
LooktotheLeft
--------------
You have a valid point there.
Agreed 100%
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
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Amid the ongoing financial regulation overhaul, the banking industry is hoping to pull off a quiet power grab that has eluded its grasp since the Great Depression, by stripping the independence of the board that sets financial accounting standards.
The move could effectively let banks set their own accounting standards in rough economic times.
Astonishingly, at a time when the public is crying out for greater regulation to limit excessive risk-taking by financial institutions, the banks are trying to get Congress to agree that the next time there's a big downturn, they should have the ability to alter their accounting standards -- essentially, fudge the numbers -- so that the public and investors won't be able to tell how insolvent they really are. By ignoring their declining asset values, they can avoid the standard requirement of raising more capital.
The mechanism is contained in an amendment set to be introduced in mid-November by Rep. Ed Perlmutter (D-Colo.) that would move final authority over the Financial Accounting Standards Board (FASB) from the Securities and Exchange Commission to a new body, a so-called "oversight" board, that would include the officials charged with managing systemic risks to the financial markets.
[UPDATED: Scroll down for the legislative language, which surfaced Friday and goes even further than suspected.]
These regulators would have the authority to override FASB's accounting guidelines by taking into account economic conditions.
The move is so radical that it has split corporate America. The bankers and members of Congress who support it have earned themselves an unlikely enemy: the U.S. Chamber of Commerce.
A typical business or investor, after all, prefers honest, independent accounting, because they buy and sell real things based on real value.
Story continues below
"Washington isn't thinking straight," said Josh Rosner, managing director of Graham, Fischer & Co, a New York-based financial analyst who advises regulators and institutional investors. "Financial statements are for the benefit of investors."
Indeed, allowing banks to alter accounting standards when they run into trouble is incentive to take more risk and, in essence, institutionalizes fraud. The regulators would now be under enormous political pressure -- and sometimes under direct orders -- to allow banks to remain in business long after they've become insolvent, in the hopes that things will turn around and they'll grow again.
And rather than stabilize the system, removing accounting independence destabilizes it in the long run, as investors and other banks have little confidence in the veracity of financial statements.
Perlmutter told the Huffington Post that under his proposal, the FASB "would stay with the SEC, but in instances where an accounting procedure or a way it's being implemented poses a threat to the financial system by exaggerating what's going on -- is pro-cyclical to a point that it, too, threatens the system -- then the financial regulator, the systemic regulator, could look in to it.
"For virtually every situation you can think of, there's no change, but [there would be a change] in the event that there's a threat to the system, like the dysfunctional market we had from October through March, and that the accounting procedures just didn't fit for a system where there was no market," Perlmutter said.
Leslie Oliver, a spokeswoman for Perlmutter, said backers of the amendment haven't been surprised at the opposition from certain sectors of corporate America.
"That's understandable for a company that has tangible assets," she said. Perlmutter said he has yet to hear directly from the Chamber.
That the banking industry finds itself in opposition to large sectors of the business community is evidence that a historic power struggle for control of the economy is underway.
The issue is stirring up the House Financial Services Committee. "It's caused a great deal of controversy," said committee chairman Barney Frank (D-Mass.). Frank has yet to take a position, he said, waiting until Perlmutter finishes meeting with members of the committee. "I told him I would wait until he finishes his conversations," Frank told HuffPost.
FASB is fighting to keep its independence. "The amendment that's being considered represents a shift that threatens to fundamentally challenge the objectives of financial accounting and politicize the process and harm financial system," said FASB spokesman Neal McGarity. "The mission of bank regulators is to ensure the safety and soundness of the banking system. We have a different mandate. That's why this is of considerable concern."
A powerful subcommittee chairman already opposes it. "I'm for keeping the independent FASB and I see no reason to change it," Rep. Paul Kanjorski told HuffPost.
The Chamber joined with investors and auditors in opposing the Perlmutter amendment.
From a letter sent to top committee members by representatives of the Center For Audit Quality; the Chamber of Commerce; and the Council of Institutional Investors:
"By placing the FASB under the jurisdiction of a structure charged with managing systemic risks to the financial markets, accounting rules will be viewed though the narrow lens of a few large companies from specific industries, rather than considerate of the applicability of financial reporting policies to over 15,000 public companies. Such a narrow focus can skew standards such that it makes understanding of transactions that businesses engage in on a daily basis more difficult and undermine the confidence of investors. We believe that the SEC has been and continues to be best suited to provide the oversight of the FASB for such a broad and diverse economy."
The American Bankers Association stands on the other side. "A Systemic Risk Oversight Council could not possibly do its job if does not have oversight authority over accounting rulemaking," top bank lobbyist Ed Yingling testified before the committee on October 29. "This is a major deficiency in the draft legislation. Accounting policies are increasingly and profoundly influencing financial policy and the basic structure of our financial system. Thus, accounting standards must now be part of any systemic risk calculation. To do anything less creates the potential to undermine any action taken to address a systemic risk. The Financial Accounting Standards Board should continue to function as it does today, but it should no longer report only to the Securities and Exchange Commission (SEC). The SEC's view is simply too narrow. Accounting policies contributed to the crisis, as has now been well documented, and yet the SEC is not charged with considering systemic and structural effects."
Yingling said the ABA "strongly supported" the approach taken by Perlmutter. "We thank Representatives Perlmutter and [Frank] Lucas [R-Okla.] for their foresight and leadership on this critical issue."
While the big banks would be pleased by the change, Frank said, the major push has come from community banks. Perlmutter said that his amendment was one of the community bankers' highest priorities.
Community banks are a popular and powerful political force in Congress. They didn't heavily trade the exotic products that nearly brought down the global economy; they received little in the way of bailout money; they don't give multi-billion-dollar bonuses; they tend to take more responsibility for loans that they issue; and they're generally respected members of the local community.
"Many members of the committee are supportive of community banks," said Rep. Maxine Waters (D-Calif.), one of the most progressive members of the committee and a subcommittee chair. "The big banks have been such an outrageous, scandalous story about how they operate and what they have done that we tend to want to support the community banks in whatever they ask us to do."
Waters told HuffPost she supports Perlmutter's amendment.
And winning the support of community bankers is in essence a necessary condition for Democrats who want to pass reform legislation through the Financial Services Committee. The Perlmutter amendment could be a way to win community banks over to the idea of a systemic regulator, a priority of the administration.
But working to loosen accounting rules could come back to hurt the Democratic Party: When the system goes down again, voters will want to know why.
When HuffPost asked Frank if Wall Street was pushing Perlmutter's measure, he responded emphatically.
"You have this caricature in your heads. You literally don't understand the way the world works," he said. "It's the community banks, the credit unions, who are driving this...Seriously, the community banks have the political clout here. Not the Wall Street banks."
Frank said the ABA was likely pushing for the amendment to win favor with community banks in its rivalry with the Independent Community Bankers of America.
Perlmutter agreed. "It's the community banks I've been working with. I'm not hearing it from the Wall Street guys," he said.
While the ABA has traditionally been associated with large Wall Street banks, it also represents small banks and is attempting to expand its membership by signing up more community bankers.
It works well for the big banks when their interests are aligned with the little ones, as is the case here. When their interests are not aligned, the little banks often win. Community banks, for instance, won an exemption from examinations -- though not the rules -- related to the Consumer Financial Protection Agency.
The ICBA wants to use its clout and the distrust of the big banks to move Perlmutter's amendment even further in their direction. "We're not buying and selling all the time. We hold a lot of things for the long term.... So we'd like to build in some additional sensitivity to community banks so would like to make that more explicit," Steve Verdier, an ICBA senior vice president, told HuffPost. "We're going to get in touch with [Perlmutter] to see if there are more things that can be done to tweak it in our direction."
Much of the debate around the amendment comes down to what is called the mark-to-market accounting requirement. Banks -- both big and small -- have long sought to avoid marking their assets down to market prices when those market prices are too low. Marking down the assets requires the bank to take a loss on its books, which then requires it to raise more capital by selling off assets at low prices. Banks claimed that in the fall, the market had frozen and that they couldn't sell assets. Another way of putting it is that the market price was lower than they wanted to accept.
Regardless, forced selling at low prices creates a downward spiral that banks and the GOP blame for the financial crisis last fall. The GOP called for a study of the effect of mark-to-market accounting on the economic collapse as part of the bailout. That report found the accounting practice did not cause the collapse. Either way, the banks hope to avoid that cycle when the commercial real estate market collapses and they find themselves with bad loans again.
"It's about easing the pressure to reduce the value of their assets in community banks, so they don't have to raise more capital," Frank said.
Asking accountants to change standards based on economic conditions could very well make their heads explode, however. It's not their job, they say, to keep the system from collapsing. It's their job to give honest numbers. If a company is bankrupt, it's bankrupt.
"Accounting standards are not policy," remarked one person involved in the fight.
But they have become policy. In the spring, Kanjorski's subcommittee hauled the head of FASB in for a hearing and demanded the number-crunchers change their mark-to-market standards within three weeks or Congress would do it for them. FASB's head pushed back during the hearing, saying that banks who called him asking for such a change were usually bankrupt fairly quickly.
"They practically dragged him into the hallway and beat him to death," said Rep. Brad Miller (D-N.C.), a committee member skeptical of the Perlmutter amendment.
Three weeks later, they eased their accounting rules. But it wasn't simple for the banks. Even with the intense congressional pressure, the change only sneaked by by a single vote and created tension on a board accustomed to a freedom from politics. The Perlmutter amendment would make such a battle unnecessary for the banks.
"There are a lot of banks that are in a lot of trouble and have a lot of exposure to commercial real estate," Miller said. "You can't fix that with accounting."
Rep. Alan Grayson (D-Fla.) fought a lonely battle last spring to stave off the loosening of the accounting rules and opposes this more dramatic shift, as well. Banks may have good reason to want to overstate the value of their assets, he said, and it may work for a time. But an economy can't be run indefinitely on imaginary numbers. "I enjoy reading fiction, but not in financial statements," he said.
UPDATE: HuffPost obtained a copy of the amendment language that is circulating among lobbyists. Perlmutter's spokeswoman confirmed its authenticity.
The amendment would empower the council overseeing FASB to "recommend to the SEC, either publicly or privately to take such action as is necessary, including but not limited to suspension, modification or elimination of such accounting principles, standards or procedures as they may apply to the stability of the financial system or the safety and soundness of financial companies, as a whole, for such duration as is reasonable and appropriate."
If the SEC doesn't follow the "recommendation," according to section (c) of the amendment, the council can order it to do so.
In other words, for the sake of financial stability, bank regulators could secretly order the "elimination" of accounting standards.
SEC. 1103. PRUDENTIAL OVERSIGHT OF ACCOUNTING PRINCIPLES AND STANDARDS THAT POSE SYSTEMIC RISKS.
(a) IN GENERAL.--In the event that any member of the Council believes that an accounting principle, standard or procedure threatens the stability of the United States financial system or companies, as a whole, then the Council shall investigate and by a majority vote, determine whether any corrective action, emergency or otherwise, is necessary to prevent or mitigate any adverse effects from such principle, standard or procedure. In the event that the Council determines that corrective action is necessary then, the Council shall recommend to the SEC, either publicly or privately to take such action as is necessary, including but not limited to suspension, modification or elimination of such accounting principles, standards or procedures as they may apply to the stability of the financial system or the safety and soundness of financial companies, as a whole, for such duration as is reasonable and appropriate.
(b) ADOPTION OF COUNCIL RECOMMENDATIONS BY SECURITIES AND EXCHANGE COMMISSION.--the Securities and Exchange Commission shall ensure that the prudential standards recommended by the Council are implemented within 60 days of the Council's recommendation or within such other time period specified by the Council.
(c) FAILURE TO ADOPT STANDARDS.--If the Securities and Exchange Commission fails to ensure that the prudential standards recommended by the Council are implemented within the time period specified in paragraph (b), the Council is authorized to direct that any recommendations issued pursuant to paragraph (a) be implemented for the purposes of generally accepted accounting principles."
UPDATE II: The SEC and the American Institute of Certified Public Accountants both oppose the amendment, as well. "Accounting should be about accounting, and not about anything else," writes SEC chair Mary Schapiro in a letter to Frank sent Thursday.
From a letter from the AICPA:
It is our understanding that Congressman Ed Perlmutter (D-CO) is considering language to amend the Financial Stability Improvement Act of 2009, which would undermine the independent accounting standard process as currently carried out by the Financial Accounting Standards Board (FASB). The American Institute of Certified Public Accountants (AICPA) strongly opposes this amendment and any attempt that would serve to undermine the independence of accounting standard setting. The purpose of public company financial reporting is to provide investors with clear, objective, and transparent financial information. This helps investors make informed investment decisions. Any attempt to divert financial reporting from its primary investor-focused objectives to other policy objectives with regard to financial institutions damages investor protections.
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- TiffanyHusseinBanned I'm a Fan of TiffanyHusseinBanned 343 fans permalink
Pox News now there's a tr@ shy news show.
Reply Favorite Flag as abusive Posted 06:55 PM on 11/06/2009
- AtomicallyCorrect I'm a Fan of AtomicallyCorrect 3 fans permalink
Yay free hand basket rides, hop on board everybody.
Reply Favorite Flag as abusive Posted 06:55 PM on 11/06/2009
- KriTiKiT I'm a Fan of KriTiKiT 28 fans permalink
thats just fine...
Reply Favorite Flag as abusive Posted 06:55 PM on 11/06/2009
- GEM-592 I'm a Fan of GEM-592 4 fans permalink
They've been able to get away with countless accounting deceptions all along, which is why the mess came on so fast in the first place. The legislation is an insult to public discourse, and to the electorate. Just another day in Congress.
Reply Favorite Flag as abusive Posted 06:55 PM on 11/06/2009
- FloydRTurbo I'm a Fan of FloydRTurbo 114 fans permalink
The week in review!
1) The DOW grew.
2) The economy grew.
3) Republicans have fewer congressional seats then when the week began.
Good week!
Reply Favorite Flag as abusive Posted 06:54 PM on 11/06/2009
- gmailliw I'm a Fan of gmailliw 184 fans permalink
Wow! My positive comments about Ron Christie and my comment about Tan cr edo being a Yankees fan was scrubbed two times
--Tiffany
========== ========== ========== ==================== ==========
Let that be a lesson about speaking iII of the Yankees.
Good decision, HP.
Reply Favorite Flag as abusive Posted 06:54 PM on 11/06/2009
- FinkeldorfFiddlestix I'm a Fan of FinkeldorfFiddlestix 21 fans permalink
Ladynaga
http://www.youtube.com/watch?v=la42R5MX_PE
Reply Favorite Flag as abusive Posted 06:54 PM on 11/06/2009
- ladynaga I'm a Fan of ladynaga 457 fans permalink
{{Hug}} Thank you so much, love you back
Reply Favorite Flag as abusive Posted 06:54 PM on 11/06/2009
- mightyhead I'm a Fan of mightyhead 8 fans permalink
Wouldn't it be more efficient to just pay our taxes directly to the financial industry? If we need any money for national defense, fixing roads, or plucking people off rooftops we could just borrow it back from them (for a reasonable fee of course).
So much of our taxpayer money is being wasted by funneling it back to the government in the form of lobbying when we could just have the financial industry write all the legislation. What? They already do that?
Never mind.
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- Brebro I'm a Fan of Brebro 4 fans permalink
How did our country get so F* ed up? Dems and Reps alike. Greedy BASTARDS!!!!!
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- lynjs I'm a Fan of lynjs 21 fans permalink
See, that's it. These guys haven't learned and never will. Just nationalize the banks and be done with it. Sometimes you have to go that extra mile before they believe that things must change.
Reply Favorite Flag as abusive Posted 06:52 PM on 11/06/2009
- hankledeep I'm a Fan of hankledeep permalink
Buy all the gold you can. But where to stash it? If your bank goes belly up can they grab your lock-box?
I'm thinking of burying my Golden Eagles in a coffee can out in the forest. With a little luck you can find it again in a pinch..........
Reply Favorite Flag as abusive Posted 06:51 PM on 11/06/2009
- therealjujubear I'm a Fan of therealjujubear permalink
you buy and store off-shore. less risk of confiscation.
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- gmailliw I'm a Fan of gmailliw 184 fans permalink
spartacus7502 wrote:
I could see this coming.
The inability of FASB to back away from mark-to-Market forced the feds to inject a lot of money into the financial system that could have been simply differed through accounting. The ability to take into account the lack of market for an asset, that has a revenue stream associated with it, is a financing tool that would have been quite handy during the crisis.
Selling into a flushing market and then taking the lower prices and marking down reserves is what nearly kiIIed us. The rule should revert the valuation to present value of the revenue stream that the underlying asset is generating, when no credible market exists. A credible market being a price that is within striking distance of the revenue streams present value.
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Couldn't agree more.
I'm just trying to understand how mark to market is effective when the market is in crisis. How does one value an asset in an unstable market? And think of what it's like trying to value mortgage related securities when the market is in crisis?
Reply Favorite Flag as abusive Posted 06:51 PM on 11/06/2009
- Tough Love I'm a Fan of Tough Love 3 fans permalink
So basically, the banks want to stay overleveraged to maximize any potential profits, since there is absolutely no risk involved, because Government has taken on the risk on behalf of the taxpayers.
What could go wrong?
Reply Favorite Flag as abusive Posted 06:50 PM on 11/06/2009
- mcantwell I'm a Fan of mcantwell 298 fans permalink
That is an cute avatar
Reply Favorite Flag as abusive Posted 06:52 PM on 11/06/2009
- MikaS I'm a Fan of MikaS 266 fans permalink
It is.
: )
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- learntofly I'm a Fan of learntofly 189 fans permalink
:-0
Fanned.
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- rubygreen I'm a Fan of rubygreen 262 fans permalink
I love Markos Moulitsas (dailykos) and David Shuster!
Took Tancredo down!!!!
Reply Favorite Flag as abusive Posted 06:50 PM on 11/06/2009
- gmailliw I'm a Fan of gmailliw 184 fans permalink
Great stuff.
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
- LooktotheLeft I'm a Fan of LooktotheLeft 546 fans permalink
HP,
To have muzzled us (w/ heavy moderation) with such an important thread as what happened at Ft. Hood yesterday is straight from Karl R*ove's playbook. I thought we were in a better place now. There were so many things to say during a "now missed" window of opportunity. Could you simply have looked the other way for 24 hours? Guess not.
My recommenda tion.....n ext time, put the heavy moderation on threads about banks. In the big scheme of things, no one really cares about them. Don't "heavily mod" something so human. Us little people known as posters, from coast to coast and from overseas, need catharthis too.
Reply Favorite Flag as abusive Posted 06:50 PM on 11/06/2009
- ladynaga I'm a Fan of ladynaga 457 fans permalink
Second that
Reply Favorite Flag as abusive Posted 06:52 PM on 11/06/2009
- mcantwell I'm a Fan of mcantwell 298 fans permalink
LN: Did you see...I've made it up to 298. :)
Reply Favorite Flag as abusive Posted 06:54 PM on 11/06/2009
There are More Comments on this Thread. Click Here To See them All
- forpeace I'm a Fan of forpeace 247 fans permalink
LooktotheLeft
--------------
You have a valid point there.
Agreed 100%
Reply Favorite Flag as abusive Posted 06:53 PM on 11/06/2009
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Leveraged ETF Performance in 2009 (Via Bespoke)
(My comment: these are a day traders dream when catching a day or trend buy or sell signal. You can not hold against the trend though)
Leveraged ETF Performance in 2009
After leveraged and inverse ETFs hit mania status in 2008 and early 2009, their star-power has begun to fade as brokerages have begun to put big restrictions on them. But they're still being traded, and below we highlight the best and worst performing leveraged and inverse ETFs in 2009. As shown, the 2x technology sector ETF (ROM) is up the most so far this year with a gain of 109.44%. The 2x materials sector ETF (UYM) ranks 2nd with a gain of 96.65%, and the 2x silver ETF (AGQ) is not far behind in 3rd at 95.05%. All but one of the best performing ETFs listed below are on the long side. The lone short ETF that is on the list of winners is TBT, which provides 2x the inverse daily return of long-term Treasuries.
The double and triple short ETFs have gotten crushed this year, which is no surprise given the rally we've had. The 3x short Financial ETF is down the most at -93.88%, followed by a 2x short Financial (RFN) with a decline of 81.16%. All of the double and triple short ETFs listed below are down more than 50% so far in 2009.
November 06, 2009
Leveraged ETF Performance in 2009
After leveraged and inverse ETFs hit mania status in 2008 and early 2009, their star-power has begun to fade as brokerages have begun to put big restrictions on them. But they're still being traded, and below we highlight the best and worst performing leveraged and inverse ETFs in 2009. As shown, the 2x technology sector ETF (ROM) is up the most so far this year with a gain of 109.44%. The 2x materials sector ETF (UYM) ranks 2nd with a gain of 96.65%, and the 2x silver ETF (AGQ) is not far behind in 3rd at 95.05%. All but one of the best performing ETFs listed below are on the long side. The lone short ETF that is on the list of winners is TBT, which provides 2x the inverse daily return of long-term Treasuries.
The double and triple short ETFs have gotten crushed this year, which is no surprise given the rally we've had. The 3x short Financial ETF is down the most at -93.88%, followed by a 2x short Financial (RFN) with a decline of 81.16%. All of the double and triple short ETFs listed below are down more than 50% so far in 2009.
November 06, 2009
Premarket dip on the worst UE (10.2%) in 30 years...then we reversed to get back above this trend line which could be a 2 'fer headfake all in 1 hr
Squint your eyes and you might imagine the right side forming a right H&S shoulder
11/5/09
US Dollar ETF (UUP) spikes and reverses still up over 1%....Stocks up(?), GLD down Oil unch, TLT uch now
UPDATE UUP SPKIKES ON DB STATING THEY WILL NOT ISSUE NEW SHARES OF UUP.. (UNG DID THE SAME THING AND IT DROPPED 30%)
01:37 PM PowerShares DB US Dollar Index Bullish Fund (UUP) halted pending clearance of its request to register another 100M shares "in order to meet investor demand."
Just another way traders without a real USD print won't know what's going on.
01:37 PM PowerShares DB US Dollar Index Bullish Fund (UUP) halted pending clearance of its request to register another 100M shares "in order to meet investor demand."
Just another way traders without a real USD print won't know what's going on.
11/4/09
SPX up .9% PM, ABK up 30% on $7.00 / share ER PPS 1.40 now
Job report near expectation -200k. Layoff report better than expected... Crude report then Fed anncm't later. USO near breakout levels ($42), Bonds and dollar off PM
11/3/09
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