Schumer and Enron II
By Old Crow Posted in Economy — Comments (4) / Email this page » / Leave a comment »
According to CFO.com, Senator Schumer sent a letter to the big four accounting firms encouraging them to modify sub-prime (toxic) loans in risk of default in order to give borrowers a little more wiggle room.
I thought one lesson learned from Enron, was that accounting firms shouldn't have cozy relationships with the companies whose books they are auditing? Now a sitting Senator is encouraging this very behavior.
Specifically, Schumer's letter addresses changes in the interpretation of FAS 140. More info here about FAS 140.
As Jack Ciesielski states over at Seeking Alpha:
"What does the government want from the auditing profession - independent verification of financial reporting to instill investor confidence in markets? Or does it want them to shill for political policies because they happen to be situated at a convenient nexus in the financial reporting machinery? Let’s hope it’s not the latter."
"Because these companies involved in auditing the books of the lenders didn't inform their clients of this rule, thousands of people were unfairly victimized because the companies didn't take advantage of the rule change, even though I recommended they do that. That's why we need my [insert new program] to stop these predatory practices from occurring ever again..."
But positioning himself to be a 'savior' to the borrowers fits his character. The problem is his shallow knowledge of the markets coupled with an act-now, think-later behavior is reckless.
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"Enlightened statesmen will not always be at the helm." -- James Madison
Chucky has fielded more than a few angry/desperate phone calls from Wall Street executives in the past couple of weeks. He is expected to be their fixer. He's fixing the accontants so that they don't say anything that "might be misconstrued."
James Hansen - Scott THomas Beauchamp with a PhD.
I'm a little ignorant and confused here, so please help me:
Why in the world would Charles Schumer be sending a letter to *auditors* telling them what to tell the companies they audit about the rules they're supposed to follow?
First of all (and again, excuse my naivete) I assume that all the companies involved in these financial arrangements would already be well aware of these changes in the rules. They *can* read the relevant documents, can't they?
Is Schumer setting himself up for a big press conference in which he lambastes the accounting industry for not following his recommendations to avert the crisis of foreclosures? That's what it smells like to me.