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January 29, 2023

SEC Asking FASB About Looking Into That MF Global Accounting Thingamajig

Because, you know, it’s sorta tricky and it didn’t really turn out so well for Corzine & Co.

The SEC is in talks with the Financial Accounting Standards Board, which sets accounting standards, about “repurchase-to- maturity” agreements that MF Global used in off-balance-sheet accounting, Schapiro said today during a hearing before the U.S. Senate Agriculture Committee in Washington. “We are talking with FASB about whether we need more disclosure of those,” Schapiro said.

Senator Kent Conrad (D-ND) seems a little more urgent:

“How is it possible that someone is able to bet the farm here, multiple times, and it disappears from the balance sheet because of this repo-to-maturity technique?” asked Senator Kent Conrad, a North Dakota Democrat, noting that the technique made it appear as though the risk had been “sold.”

“That is a loophole so big you can drive a Mack truck through it,” Conrad said. “If that’s not closed, we should ask ourselves what we’re doing.”

I think we all know what a lot of people at the SEC are doing.

MF Global Accounting Technique Under Review, Schapiro Says [BBW]

Because, you know, it’s sorta tricky and it didn’t really turn out so well for Corzine & Co.

The SEC is in talks with the Financial Accounting Standards Board, which sets accounting standards, about “repurchase-to- maturity” agreements that MF Global used in off-balance-sheet accounting, Schapiro said today during a hearing before the U.S. Senate Agriculture Committee in Washington. “We are talking with FASB about whether we need more disclosure of those,” Schapiro said.

Senator Kent Conrad (D-ND) seems a little more urgent:

“How is it possible that someone is able to bet the farm here, multiple times, and it disappears from the balance sheet because of this repo-to-maturity technique?” asked Senator Kent Conrad, a North Dakota Democrat, noting that the technique made it appear as though the risk had been “sold.”

“That is a loophole so big you can drive a Mack truck through it,” Conrad said. “If that’s not closed, we should ask ourselves what we’re doing.”

I think we all know what a lot of people at the SEC are doing.

MF Global Accounting Technique Under Review, Schapiro Says [BBW]

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