Scrutiny at the Gate: Firms' Role Questioned [WSJ]
Deutsche Bank Ignored Some “Losses” Until They Went Away [S]ome things live in a level-3 world where there are no specific rules and no obvious markets and you rely on good faith and estimates and conversations with your auditors. Tailored credit derivatives where Deutsche Bank was “65 per cent of all leveraged super senior trades” clearly fall in that bucket, so they talked to their auditors and the auditors signed off on what they did and, that’s kind of the end. Was the model (or series of ad-hoc models and reserves and absences-of-models) blessed by the auditors worse than Ben-Artzi’s? Sure! But so what? The model blessed by the auditors for loans – “hold them at historical cost” – is clearly worse than a market-based model, in the sense of “less reflective of the expected probability distribution of future cash flows.” And loans are the bulk of most banks’ assets. Accounting isn’t supposed to be a correct representation of your most likely future cash flows. It’s just accounting. [DB]
Grover Norquist’s Dirty Little Secret [Bloomberg]
Standard Chartered to Pay $330 Million to Settle Iran Money Transfer Claims [DealBook]
IRS Warns Congress About Failure to Address Alternate Tax [BBW]
HP – Autonomy: How Might the Auditors Survive the Fall-Out? Audit performance – and more immediately, the survival of the large firms to serve their global clients and the capital markets – would be better achieved if the current independence requirements and constraints were scrapped altogether. [Re:Balance]
Why Breaking Up H.P. Makes Sense [DealBook]
Cops: Patron Attacked McDonald's Worker Over Unwanted Cheese On His Hamburger [TSG]
