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Non-Tech : Banks--- Betting on the recovery -- Ignore unavailable to you. Want to Upgrade?

To: Asymmetric who wrote (1217)	10/27/2010 9:22:00 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 1428

At the heart of the issue is a set of arcane corporate governance accounting rules that call for banks to release loan-loss reserves as soon as they don't expect to need them, even against the protest of some bank officials. I suspect that this is going to perform a 180 degree turn as the TBTF banks are forced by their investors/insurers to buy back Billions in mortgage loans that were fraudulently originated/foreclosed. But I wonder whether the same accounting rules will apply for the monoline insurers, who have been forced to set aside billions in reserves against these fraudulent mortgage notes and MBS. If we essentially see banks required to set aside more reserves, it stands to reason that the monolines will be allowed to release their reserves and reapply them back to their income statements. Hawk