Banks in ‘Downward Spiral’ Buying Capital in CDOs (Update1)

FASB (Financial Accounting Standard Board), the gatekeepers of honest and transparent auditing, delivered to you by blessing total fabrication in accounting, the Equity Rally in April of 2009 and will deliver to you the second phase of the economic financial disaster. BS is not going to float on artificial OTC derivative assets later in 2010 and 2011.

Jim

Let me throw out these dates: 08/11/10, 04/29/11, 01/16/12

Eric

U.S. banks are fighting to preserve the use of securities that help them appear better capitalized, even as their investments in each others’ notes perpetuate what one regulator calls a “downward spiral” of losses.

The cross-ownership, largely unnoticed by bank supervisors who generally discourage the practice, was made possible by a Wall Street innovation like the ones that allowed subprime mortgages to flourish. Small lenders, such as Riverside National Bank of Florida, were able to sell trust-preferred securities, known as TruPS, because investment bankers packaged them with those issued by dozens of other financial institutions.

Source: bloomberg.com