Word: asseted
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...amounts. For instance, Citigroup's Chua says one of the reasons Asia's stock and property markets have been rallying over the last six months is because of the overabundance of short-term liquidity. "A lot of dollars are seeping into Asian economies," she says. "That's pumping up asset bubbles." When those bubbles burst, as they frequently do, there will no doubt be unpleasant messes to clean...
...earnings or deplete lending. How is it possible that the FDIC's gain will not be a loss to the banking system? It's all thanks to an accounting quirk that allows companies to spend money on something but not actually tell their shareholders about the cost until the asset is gone. For you and me, it would be like shoplifting at the supermarket and then dropping off cash every time you decided to eat something. A can of beans might not cost you anything for years. The rule is supposed to match the revenue generated by the stuff...
...banks will pay the FDIC all of the fees that they believe they will owe the agency through the end of 2012. But even though the banks will make those payments this year, they won't show up on 2009 income statements. Instead, each bank will add an asset, a big one, to its balance sheet, right below where the cash they just handed over to the FDIC used to be. It will be called something like prepaid FDIC premiums. The asset will shrink each quarter by the amount each bank normally would have paid the FDIC. As the bank...
...problem with the FDIC's solution is it does nothing to keep its fund officially out of the red. That's because the same accounting that allows banks to hide the costs will prevent the FDIC from marking up its own assets. Just as the banks get to add an asset to their balance sheet for the money they are prepaying, the FDIC has to book a liability for the money that it has received from the banks but is not actually entitled to yet. That liability will lower the balance of the FDIC's fund by the same amount...
...measures would require banks to boost their capital base and put strict limits on the extent to which they would be able to leverage their balance sheets. They would also require banks to keep a portion of the loans they sell as asset-backed securities to ensure that they have a stake in what happens to those loans. Some regulators including Britain's Turner are calling for big financial institutions to have "living wills" that would enable their activities to be wound up in an orderly manner in the event they failed, thus avoiding the sort of panic caused...