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Buzz & Banter



Why are the feds circling the wagons? Easy Al is after these GSEs and I think even Dallas Fed President Robert McTeer has voiced concern. Now the Snow Man at Treasury says we need more regulation than transparency.

Why now? What does it mean? Financial institutions get "pick 'em" treatment on financial assets, ie: held to maturity or available for sale. Ditto FASB 131, which governs accounting treatment for hedges. Cash flow hedges hit the balance sheet while fair value hedges hit the income statement. But if the hedges don't "track" they can be reclassified as the other kind. Voila, a veritable cookie jar for managing earnings if you want to.

Did they do this? I dunno, but when something as complicated as these two consistently make or beat some smoothed number, how could they not have managed earnings? The fact that so many government types are now getting involved tells me something bad must be happening and these guys are covering their tails not to get blamed.

Pure fantasy? We will know soon enough.

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