Bank of America swings to $6.2bn profit [FT]
Bank of America reported a third-quarter net profit of $6.2bn but the results were flattered hugely by accounting gains and its sales of shares in China Construction Bank. Stripping out a litany of exceptional items, from a $3.6bn gain due to the CCB stake sale to a $4.5bn boost from an accounting rule that allows banks to book a profit on the falling value of their own debt, BofA’s businesses produced a loss.

Paul Seeks $1 Trillion Spending Cuts [WSJ]
Mr. Paul, a longtime Texas congressman, said he would close the departments of Education, Energy, Commerce, Interior and Housing and Urban Development, as part of a broader plan to cut federal spending. The federal work force would be cut by 10%. Mr. Paul also called for stopping foreign aid and “ending foreign wars.” His “Plan to Restore America” would end the estate tax and taxes on personal savings, “allowing families to build a nest egg.” He would extend tax cuts on personal income, capital gains and dividends that were enacted under former President George W. Bush.

Corporate leaders say they understand protests [FT]
“I understand some of the angst and the anger. This downturn has been too long, unemployment is too high, and people are hurting. We get that,” said John Stumpf, Wells Fargo chief executive, on a conference call announcing that the nation’s largest bank by market capitalisation had recorded a record $4.1bn quarterly profit.

The Tax Reform Act of 1986: Should We Do It Again? [Economix/NYT]
Republican tax reformers of the 1980s, such as Representative Jack Kemp of New York and Senator Bob Kasten of Wisconsin, were willing to put specific tax preferences on the table for elimination and take the heat for doing so. Reagan built on their efforts and put forward a very detailed plan for tax reform in May 1985, based on several years of work by the Treasury Department, that identified a long list of tax provisions needing pruning from the tax code, along with supporting analysis and documentation. Today, Republicans like Mr. Cain put most of their efforts into devising catchy slogans and almost none into providing details of their tax proposals.

The Young Are Happy at Work [WSJ]
ounger workers tend to be happier with their employers than their older counterparts—but they are also more likely to be looking for an exit. Those attitudes—culled from a recent survey by consulting firm Mercer of nearly 30,000 workers from a variety of industries world-wide—might seem contradictory, but they do make sense, says Bruce Tulgan, founder of Rainmaker Thinking Inc., a workplace consulting company. Twenty-somethings may see a job in a “short-term, transactional way,” he says. “They don’t necessarily think ‘Where do I fit in with this employer?’ “

Bad Math Hurts Cain’s Good Tax Intentions [Bloomberg]
Not to worry: There’s also no reason to think the federal government would ever enact Cain’s plan. Even if, per impossibile, Cain were elected president, Congress isn’t going to tell senior citizens that, after having paid taxes on income all their lives, they will now incur extra sales taxes when they spend the money. It’s not going to raise taxes on millions of poor and middle-class people.

U.S. bank accounting rule has big earnings impact [Reuters]
“This is the most vilified accounting rule I’ve ever seen. It’s amazing how universally despised it is,” said Robert Willens, author of the Willens Report, which analyzes corporate accounting and tax matters.

IRS chief: Budget cuts would hurt U.S., taxpayers [WaPo]
Shulman said that because the IRS workforce accounts for 92 percent of enforcement spending, slashing the IRS budget by the amounts being considered would force substantial cutbacks in front-line IRS staff. The federal government would lose about $4 billion in annual revenue, he said, “or seven times the reduction in IRS budget.”

The Shadow of Enron Still Lingers [WSJ]
The beginning of the end for Enron Corp. came exactly a decade ago. Yet the energy giant’s colossal collapse casts a long shadow over the government’s efforts to punish wrongdoing during the financial crisis. In October 2001, the highflying Houston company jolted investors with a big loss. Less than two months later, Enron was bankrupt, and the scandal led to 42 civil enforcement actions by securities regulators and criminal charges against 33 people and the company’s auditor, according to a tally by law firm Davis Polk & Wardwell LLP. More than a dozen peoFormer Enron President Jeffrey Skilling, now 57 years old, is serving a 24-year sentence in a Colorado federal prison following his 2006 fraud conviction. Some people who helped untangle the Enron mess say the results show how regulators and prosecutors are coming up short as they work on cases tied to the financial crisis. So far, no high-profile executive has been sent to prison for crisis-related wrongdoing.

Lessons From Auditor’s Fall [WSJ]
Joseph F. Berardino says he “turned the page” on an accounting career that lasted more than 30 years. “Fate has given me an opportunity to do something different.” Mr. Berardino was chief executive of Andersen Worldwide, the parent company of Arthur Andersen, when the accounting firm was hit with a criminal charge in March 2002. He soon resigned, watching from the outside as a jury convicted Arthur Andersen of obstructing justice by shredding documents relating to its botched audit of Enron. The conviction meant Arthur Andersen was banned from auditing public companies. It was a death sentence. By the time the Supreme Court overturned the conviction in 2005, the 89-year-old firm was essentially out of business. At its peak, the firm employed 28,000 people around the world. “It’s left us with just four big accountancy firms, and I don’t know anyone these days who thinks that’s a good outcome,” Mr. Berardino says now.

Cain defends ‘9-9-9’ tax overhaul plan [WaPo]
Republican presidential candidate Herman Cain acknowledged Sunday that some Americans would see a tax increase under his “9-9-9” plan, but he insisted that “most people will pay less” under his proposal to overhaul the country’s tax code.

Zynga’s Profits Get Zyngier [GOA]
The Grumpies take on Farmville: “Zynga, Inc. filed another amendment to its registration statement. The fourth-amended S-1 for Zynga involves a change in the revenue recognition, which fortuitously turns a semi-annual loss into a semi-annual profit. Ain’t accounting great!”

Accounting Gain Boosts Citigroup Profit [WSJ]
Citigroup booked a $1.9 billion gain tied to a change in the valuation of its own debt, and continued improvement in losses from soured loans allowed the bank to reduce its loan-loss reserve by $1.4 billion. Even without the accounting gain, Citigroup’s $3.74 billion profit exceeded analysts’ expectations.

How California Was Diminished by 1978 Tax Revolt [Bloomberg]
California voters approved Proposition 13 to rein in property taxes that had doubled in 10 years. More than three decades later, that rebellion has mortgaged the state’s future, saddling it with the nation’s highest debt and lowest credit rating. The measure led to reductions that dropped per-student school spending from seventh to 29th nationally, prompted cities to pursue sprawling retail development to compensate for lost revenue, and pushed the state into budget gridlock, including a $705 million revenue shortfall announced Oct. 10, by requiring two-thirds approval for any tax increase. “Proposition 13 set up an unfair and dysfunctional two- tiered system of property taxes,” said Kevin Starr, a history professor at the University of Southern California and the author of a series of books on the state. “It choked off a source of revenue, and the lack of that revenue has brought California to the edge.”

Olympus Adviser Payments Should Be Probed, PWC Report Says [BBW]
Olympus Corp. may face regulatory and legal scrutiny because of payments made to advisers in a 2008 transaction, according to a PricewaterhouseCoopers report commissioned by ousted president Michael C. Woodford. Potential offenses include false accounting, financial assistance and breaches of duties by the board, according to an Oct. 11 report that Woodford provided to Bloomberg News. Chairman Tsuyoshi Kikukawa said at an Oct. 14 press conference that the board fired Woodford, a 30-year veteran of the Japanese company, because he “wouldn’t listen” to warnings from Kikukawa. The British executive, who is now back in the U.K., said he was fired after he challenged the transactions.

‘Capitalists of the World Unite!’ [WSJ]
You don’t have to be camped out with the protesters to be angry at Wall Street. Contrary to what you may hear, actual capitalists—those providing capital—get a raw deal down on the Street of Shame.