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To: Chispas who wrote (70815)	11/2/2007 12:33:56 PM
From: Chispas	Read Replies (1) \| Respond to of 116555

"Challenge On Bank Assets" - DJ Newswire, 11-02-07 - ........................................................... Judging by the latest crop of banking results, there's little doubt the audit profession faces an uphill task in the future. They are used to judging the financial condition of a corporation based on accounting entries and associated trails of paperwork. But the financial condition of banks, especially those with investment banking operations, are increasingly linked to assets whose value depends on in-house pricing models. Under accounting standards SFAS 157 and 159, set by the Financial Accounting Standards Board (FASB), U.S. banks will be obliged to reveal the hierarchy of those assets from Nov. 15. They will be marked Level 1, 2, 3 according to the ease of valuing them. Some investment banks have already started doing it. Similar standards are already in place in Europe under IAS 39 and IFRS7. Level 1 asset valuations pick market prices, level 3 assets are illiquid and lack observable market prices while level 2 assets fall between the two. It's the level 3 assets that must concern investors more than ever as they are marked to in-house models. Those models are more art than science and are subject to the banks' judgment. Much of the attention of such Level 3 assets has been focussed on mortgage-related assets. But they also include complex derivative contracts, credit card receivables, loans linked to leveraged buyout loans and asset backed commercial paper. Solvency risks apart, the assets have liquidity risks that need to be assessed. This is where auditors need to get tough and need tools to play devil's advocate. And regulators need to ensure auditors are providing independent judgment on these valuations. The two German banks that have suffered the most - IKB Deutsche Industriebank and Sachsen - due to exposure to asset-backed securities vehicles disclosed little about liquidity risk, much to the surprise of accounting standard setters. This despite IFRS7's, which went into effect in January 2007 in Europe, asking for detailed disclosure on complex financial instruments. Obviously the auditors - KPMG for IKB and PwC for Sachsen - were not tough enough on disclosure. From Nov. 15, the Level 3 disclosures will be accompanied by details of the basis on which they are classified. It's the auditors job to be vigilant about whether the right inputs to value Level 3 assets are used. Third-quarter numbers show some investment banks have such assets that are either equal or greater than shareholders' equity. In terms of book value of equity, some U.S. investment banks that don't have the cushion of private or commercial banking businesses show some revealing numbers. Bear Stearns' $20 billion is 50% more than its shareholders' equity. For Goldman Sachs it's nearly twice its equity. In Europe, Swiss bank UBS's Level 3 assets at Q3 stood at 6% of its total assets. That's $129 billion. Even if 10% of that is written off, the post-tax result is still equal to 10% of UBS' current market capitalization. That's why investors should be more concerned about not just the amount - it's not necessarily a bad thing to have level 3 assets - but also about the quality of disclosure. And whether the models used include as many inputs as possible. Financial regulators should ensure that the auditor validations are made public in adequate detail. ......................................................... thebusiness.co.uk

To: Chispas who wrote (70815)	11/2/2007 4:20:11 PM
From: Broken_Clock	Respond to of 116555

Welcome to the Police State. Flat out lies coupled with ultimate paranoia. ------------ Man angry with son-in-law fingers him as terrorist to FBI Nov 2 08:48 AM US/Eastern A man in Sweden who was angry with his daughter's husband has been charged with libel for telling the FBI that the son-in-law had links to al-Qaeda, Swedish media reported on Friday. The man, who admitted sending the email, said he did not think the US authorities would stupid enough to believe him. The 40-year-old son-in-law and his wife were in the process of divorcing when the husband had to travel to the United States for business. The wife didn't want him to travel since she was sick and wanted him to help care for their children, regional daily Sydsvenska Dagbladet said without disclosing the couple's names. When the husband refused to stay home, his father-in-law wrote an email to the FBI saying the son-in-law had links to al-Qaeda in Sweden and that he was travelling to the US to meet his contacts. He provided information on the flight number and date of arrival in the US. The son-in-law was arrested upon landing in Florida. He was placed in handcuffs, interrogated and placed in a cell for 11 hours before being put on a flight back to Europe, the paper said. The FBI contacted Swedish intelligence agency Saepo, which discovered that the email tipping off the FBI had been sent from the father-in-law's computer. The father-in-law has been charged with aggravated libel. He has admitted sending the email, but said he didn't think "the authorities were so stupid that they would believe anything. But apparently they are." He said he "couldn't help the US authorities' paranoid reaction". ------------ Faulty Intel Source "Curve Ball" Revealed 60 Minutes: Iraqi's Fabricated Story Of Biological Weapons Aided U.S. Arguments For Invasion 'Curve Ball' Revealed See exclusive video of the Iraqi defector known as "Curve Ball," whose tall tale of mobile biological weapons drove the U.S. argument for invading Iraq. Bob Simon reports, Nov. 4, at 7 p.m. ET/PT. \| (CBS) 60 Minutes has identified the man whose fabricated story of Iraqi biological weapons drove the U.S. argument for invading Iraq. It has also obtained video of "Curve Ball," as he was known in intelligence circles, and discovered he was not only a liar, but also a thief and a poor student instead of the chemical engineering whiz he claimed to be. 60 Minutes correspondent Bob Simon's two-year investigation will be broadcast this Sunday, Nov. 4, at 7 p.m. ET/PT. Curve Ball is an Iraqi defector named Rafid Ahmed Alwan, who arrived at a German refugee center in 1999. To bolster his asylum case and increase his importance, he told officials he was a star chemical engineer who had been in charge of a facility at Djerf al Nadaf that was making mobile biological weapons. 60 Minutes has learned that Alwan’s university records indicate he did study chemical engineering but earned nearly all low marks, mostly 50s. Simon’s investigation also uncovered an arrest warrant for theft from the Babel television production company in Baghdad where he once worked. Also appearing in Sunday's segment is video that 60 Minutes obtained of Alwan at a Baghdad wedding in 1993. He eventually wound up in the care of German intelligence officials to whom he continued to spin his tale of biological weapons. His plan succeeded partially because he had worked briefly at the plant outside Baghdad and his descriptions of it were mostly accurate. He embellished his account by saying 12 workers had been killed by biological agents in an accident at the plant. More than a hundred summaries of his debriefings were sent to the CIA, which then became a pillar - along with the now-disproved Iraqi quest for uranium for nuclear weapons - for the U.S. decision to bomb and then invade Iraq. The CIA-director George Tenet gave Alwan’s information to Secretary of State Colin Powell to use at the U.N. in his speech justifying military action against Iraq. Tenet gave the information to Powell despite a letter - a copy of which 60 Minutes obtained - addressed to him by the head of German intelligence stating that Alwan appeared to be believable, but there was no evidence to verify his story. Through a spokesman, Tenet denies ever seeing the letter. "[Tenet] needs to talk to his special assistants if he didn’t see it," says Tyler Drumheller, a former CIA senior official. "I am sure they showed it to him and I am sure ... it wasn’t what they wanted to see," he tells Simon. Other CIA officials doubted Curve Ball’s authenticity, including former Central Group Chief Margaret Henoch, who speaks publicly for the first time, telling Simon she openly refuted Alwan’s story. "And it was like 'Whack a Mole.' He just popped right back up. It was unbelievable." Alwan was caught when CIA interrogators were finally allowed to question him and confronted him with evidence that his story could not be as he described it. Weapons inspectors had examined the plant at Djerf al Nadaf before the fall of Baghdad and found no evidence of biological agents. In the end, however, Alwan got what he wanted. He is believed to be in Germany, free and probably living under an assumed name. Why did he do it? "It was a guy trying to get his green card essentially, in Germany, and playing the system for what it was worth," says Drumheller. "It just shows ... the law of unintended consequences," he tells Simon. Produced By Draggan Mihailovich © MMVII, CBS Interactive Inc. All Rights Reserved.