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Window dressing of balance sheet in AngloIrish Bank case

patslatt

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See Former Anglo bankers are found guilty of

Just wondering if the defence for the AngloIrish bankers argued that the balance sheet transaction was merely window dressing that many banks engage in to make their balance sheet cash and liquid assets positions look at their best in published financial results. In Anglo's case, that would be a stretch. But legally, where does the law draw a line?Is a little financial window dressing legal but massive window dressing illegal and how massive? It's easy to be wise after the fact.

In the case of the IL/PTSB defence,just wondering if the defence argued a)the defendants were merely lending a helping hand to Anglo with no risk to IL/PTSB shareholders and b)they were putting on the green jersey to avert risks of a preventable banking industry collapse, given that Anglo's collapse could arguably have brought the whole interconnected banking industry down.

As for the latter point, historically perfectly sound banks have been made insolvent by unjustified rumours of insolvency which caused depositors to panic and pull their deposits so quickly that banks were forced to shut down.
 
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Accidental sock

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Free the Anglo 2!







I need a shower
 

irishpatriot

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Im pretty sure that if one was doing this then they were all at it. Look into all our banks and see how things should not be done.
 

Nipper

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See Former Anglo bankers are found guilty of Just wondering if the defence for the AngloIrish bankers argued that the balance sheet transaction was merely window dressing that many banks engage in to make their balance sheet cash and liquid assets positions look at their best in published financial results. In Anglo's case, that would be a stretch. But legally, where does the law draw a line?Is a little financial window dressing legal but massive window dressing illegal and how massive? It's easy to be wise after the fact. In the case of the IL/PTSB defence,just wondering if the defence argued a)the defendants were merely lending a helping hand to Anglo with no risk to IL/PTSB shareholders and b)they were putting on the green jersey to avert risks of a preventable banking industry collapse, given that Anglo's collapse could arguably have brought the whole interconnected banking industry down. As for the latter point, historically perfectly sound banks have been made insolvent by unjustified rumours of insolvency which caused depositors to panic and pull their deposits so quickly that banks were forced to shut down.
http://accounting-simplified.com/financial-accounting/accounting-concepts-and-principles/accounting-materiality.html
 

WTTR

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Is the Mona Lisa expression, a smile or sad one?

See Former Anglo bankers are found guilty of

Just wondering if the defence for the AngloIrish bankers argued that the balance sheet transaction was merely window dressing that many banks engage in to make their balance sheet cash and liquid assets positions look at their best in published financial results. In Anglo's case, that would be a stretch. But legally, where does the law draw a line?Is a little financial window dressing legal but massive window dressing illegal and how massive? It's easy to be wise after the fact.

In the case of the IL/PTSB defence,just wondering if the defence argued a)the defendants were merely lending a helping hand to Anglo with no risk to IL/PTSB shareholders and b)they were putting on the green jersey to avert risks of a preventable banking industry collapse, given that Anglo's collapse could arguably have brought the whole interconnected banking industry down.

As for the latter point, historically perfectly sound banks have been made insolvent by unjustified rumours of insolvency which caused depositors to panic and pull their deposits so quickly that banks were forced to shut down.
You know, Anglo would not have become the Bank they did, if the other financial institutions did not go stark raving mad and give anybody that crossed their threshold an up to nine times salary of a mortgage. Jumbo mortgages were their specialty.

Anglo just financed the property speculators and house builders to provide a never ending stream of houses to satisfy the happy customers of the commercial banks and building societies.

As regards a balance sheet discrepancy of €7.2Bn in the Anglo Balance Sheet.

This really is small fry within the world's Banking Balance Sheet that our maverick financial institutions were so connected with and could tumble down. :roll:

And as to your reason why "historically perfectly sound banks have been made insolvent" is because the missing half of the world's international bank balance sheet started to withdraw their funds.

Gone into the "never never land" of the holders of Off Balance Sheet Funds, Tax Havens etc.

[video=youtube;hnDe12lTO1s]https://www.youtube.com/watch?v=hnDe12lTO1s[/video]
 
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Boy M5

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See Former Anglo bankers are found guilty of

Just wondering if the defence for the AngloIrish bankers argued that the balance sheet transaction was merely window dressing that many banks engage in to make their balance sheet cash and liquid assets positions look at their best in published financial results. In Anglo's case, that would be a stretch. But legally, where does the law draw a line?Is a little financial window dressing legal but massive window dressing illegal and how massive? It's easy to be wise after the fact.

In the case of the IL/PTSB defence,just wondering if the defence argued a)the defendants were merely lending a helping hand to Anglo with no risk to IL/PTSB shareholders and b)they were putting on the green jersey to avert risks of a preventable banking industry collapse, given that Anglo's collapse could arguably have brought the whole interconnected banking industry down.

As for the latter point, historically perfectly sound banks have been made insolvent by unjustified rumours of insolvency which caused depositors to panic and pull their deposits so quickly that banks were forced to shut down.
It was beyond window dressing (a retailer closing accounts when Christmas stock is sold), this was giving impression that liquidity was better when liquidity was THE major issue.
 

patslatt

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It was beyond window dressing (a retailer closing accounts when Christmas stock is sold), this was giving impression that liquidity was better when liquidity was THE major issue.
UK BANKS BUST IN LATE 80s RECESSION

But they managed to conceal that from the public and eventually traded their way back to solvency. Mortgage defaults in the property boom mostly caused the insolvency, which was covered up by extend and pretend accounting.

The sheer insanity of Irish Celtic Tiger property price increases precluded any hope of an AngloIrish recovery from mortgages under water in the crash.
 

GabhaDubh

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Maybe, instead of having a costly trial we should have put the defendants in charge of the paperwork and system to satisfy the Bondholders.
 
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cyberianpan

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In the scheme of the banking mess it was quite minor, as it was a scheme to conceal lack of liquidity, rather than lack of solvency

Neither IFRS nor Basel II were of much use for giving financial insight into the health of credit institutions

Also usually I'm slow to critize accountancy auditors, but in this case their lack of investigative skills is laid bare...synthetic transactions like this are easy to spot

Also the CB/FR top brass gave the nod to this...and the credit institutions sent in adequate information that the regulatory staff ought to have uncovered it, but less than 2 FTEs were dedicated to quantitative analysis of all such institutions...the rest were assigned to play solitaire and masturbate Neary and Grimes pet budgie

Cyp
 

Boy M5

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UK BANKS BUST IN LATE 80s RECESSION

But they managed to conceal that from the public and eventually traded their way back to solvency. Mortgage defaults in the property boom mostly caused the insolvency, which was covered up by extend and pretend accounting.

The sheer insanity of Irish Celtic Tiger property price increases precluded any hope of an AngloIrish recovery from mortgages under water in the crash.
That's different, that's solvency not liquidity. Irish banks had massively outgrown their deposit bases massively.
The book Anglo Republic explains thisvwell.
 

Boy M5

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In the scheme of the banking mess it was quite minor, as it was a scheme to conceal lack of liquidity, rather than lack of solvency

Neither IFRS nor Basel II were of much use for giving financial insight into the health of credit institutions

Also usually I'm slow to critize accountancy auditors, but in this case their lack of investigative skills is laid bare...synthetic transactions like this are easy to spot

Also the CB/FR top brass gave the nod to this...and the credit institutions sent in adequate information that the regulatory staff ought to have uncovered it, but less than 2 FTEs were dedicated to quantitative analysis of all such institutions...the rest were assigned to play solitaire and masturbate Neary and Grimes pet budgie

Cyp
Don't forget the geniuses in the stockbroking community.
 

WTTR

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The "might" that large companies are taking for themselves in the absence of politically strong religious based principles

In the scheme of the banking mess it was quite minor, as it was a scheme to conceal lack of liquidity, rather than lack of solvency

Neither IFRS nor Basel II were of much use for giving financial insight into the health of credit institutions

Also usually I'm slow to critize accountancy auditors, but in this case their lack of investigative skills is laid bare...synthetic transactions like this are easy to spot

Also the CB/FR top brass gave the nod to this...and the credit institutions sent in adequate information that the regulatory staff ought to have uncovered it, but less than 2 FTEs were dedicated to quantitative analysis of all such institutions...the rest were assigned to play solitaire and masturbate Neary and Grimes pet budgie

Cyp
That would be the auditors from the larger practices. At the time, the turnover guideline for a company to require an audit was c.€1.25Mn. A small time auditor would have to audit the accounts of the local corner shop with the same diligence as would be required for an Aer Lingus audit.

This could only be adequately done at a loss making enterprise (the proprietor would not accept the associated fee). If a small time auditor choose not to go through the charade of pretending that ticking-off items off a computer package was sufficient, the audit license would be withdrawn from the practice.

The large auditing firms carried out audits on the banks 2004-10 that should have uncovered the disastrous potential toxic debt situation that Irish mortgage lending institutions were in. Anybody (dogs in the street) would have known this if any astute application of the matter between the ears was given to the prevailing mortgage madness and massive mortgages that our young people were taking-on.

However, I would have no doubt that in many cases, discrepancies were highlighted, indemnities sought from the FR etc before audits were signed off.

Our banks etc went burst with disastrous consequences for our economy. They had to be rescued.

The same big time Bnak auditors/accountants were subsequently given big say with the set-up of NAMA, and are still being given very lucrative commissions by the government. None of them lost their auditing license.

Another dimension of the sense of right and wrong has been added in these neo-liberal times to the separation of decisions of State/Business from those of religion; that is: the "above the law" might, that large companies (TBTF and large international auditors etc) are taking for themselves in the absence of politically strong religious based principles.

This is why, international movements like TTIP etc are so dangerous.
 
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Jack Walsh

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Very good topic.

Financial institutions doing the rounds bidding up for deposits at their financial year end is a decade's old practise.
While the scale in this case is jaw dropping the practise is and always has been common.

For this reason and for the fact that they were effectively encouraged to do so by the Central Bank I would confidently predict this decision will be successfully appealed.

If not tens of thousands of employees of financial institutions worldwide should be jailed also (assuming there is a custodial sentence handed down here).

Nolan will be very wary here (will realise an appeal is all but certain) but based on past form he will go for the wow factor and hand down stiff terms.
Now if they were sex offenders they'd be laughing.
 

patslatt

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Don't forget the geniuses in the stockbroking community.
There was advice in a national newspaper by one stockbrokerage analyst advising against purchase of bank shares after some big initial declines in share prices. I wish I could remember his name.
 
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cyberianpan

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That would be the auditors from the larger practices. At the time, the turnover guideline for a company to require an audit was c.€1.25Mn. A small time auditor would have to audit the accounts of the local corner shop with the same diligence as would be required for an Aer Lingus audit.

This could only be adequately done at a loss making enterprise (the proprietor would not accept the associated fee). If a small time auditor choose not to go through the charade of pretending that ticking-off items off a computer package was sufficient, the audit license would be withdrawn from the practice.

The large auditing firms carried out audits on the banks 2004-10 that should have uncovered the disastrous potential toxic debt situation that Irish mortgage lending institutions were in. Anybody (dogs in the street) would have known this if any astute application of the matter between the ears was given to the prevailing mortgage madness and massive mortgages that our young people were taking-on.

However, I would have no doubt that in many cases, discrepancies were highlighted, indemnities sought from the FR etc before audits were signed off.

Our banks etc went burst with disastrous consequences for our economy. They had to be rescued.

The same big time Bnak auditors/accountants were subsequently given big say with the set-up of NAMA, and are still being given very lucrative commissions by the government. None of them lost their auditing license.

Another dimension of the sense of right and wrong has been added in these neo-liberal times to the separation of decisions of State/Business from those of religion; that is: the "above the law" might, that large companies (TBTF and large international auditors etc) are taking for themselves in the absence of politically strong religious based principles.

This is why, international movements like TTIP etc are so dangerous.
The Big4/5 both carried out audits in respect of the statutory accounting obligations of the Irish Credit Institutions, and also all audits on behalf of the then CBFSAI... E.g. Basel II and more

I've a few contemporaneous posts here

http://www.politics.ie/forum/economy/22870-irish-nationwide-michael-fingleton-could-go-bust.html

Cyp
 

Ardillaun

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Shouldn't there be a limit on such practices, though? As has been pointed out, the scale here is impressive, esp. for us non-banking types, and it did create a highly misleading impression of the bank's balance sheet. What about people who invested in the bank after this event?

That was a great 2007 thread on Fingleton BTW - p.ie being useful.
 

cyberianpan

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Shouldn't there be a limit on such practices, though? As has been pointed out, the scale here is impressive, esp. for us non-banking types, and it did create a highly misleading impression of the bank's balance sheet. What about people who invested in the bank after this event?

That was a great 2007 thread on Fingleton BTW - p.ie being useful.
There were a lot of "useful idiots" left in place

Neary, many auditors...they'd not an iota they were the patsy, though they knew they weren't the real deal, and fought viciously to keep their place

Cyp
 


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