A once-obscure accounting rule that infuriated banks, who blamed it for worsening the financial crisis, was changed Thursday to give banks more discretion in reporting the value of mortgage securities.
The change seems likely to allow banks to report higher profits by assuming that the securities are worth more than anyone is now willing to pay for them. But critics objected that the change could further damage the credibility of financial institutions by enabling them to avoid recognizing losses from bad loans they have made.
Critics also said that since the rules were changed under heavy political pressure, the move compromised the independence of the organization that did it, the Financial Accounting Standards Board.
During the financial crisis, the market prices of many securities, particularly those backed by subprime home mortgages, have plunged to fractions of their original prices. That has forced banks to report hundreds of billions of dollars in losses over the last year, because some of those securities must be reported at market value each three months, with the bank showing a profit or loss based on the change.
Bankers bitterly complained that the current market prices were the result of distressed sales and that they should be allowed to ignore those prices and value the securities instead at their value in a normal market. At first FASB, pronounced FAS-bee, resisted making changes, but that changed within a few days of a Congressional hearing at which legislators from both parties demanded the board act.
“There is a perception that we are yielding to political pressure,” one board member, Lawrence W. Smith, said as he voted for the changes.
In other words, banks can now make shit up any way they want, claim profit on imaginary crap, and pay themselves handsome bonus money based on the profiy.
Something tells me this crisis is loooooong from over.
What a travesty of democracy:
Alors que le vote n’était pas prévu avant la semaine prochaine, les quelques députés présents à l’hémicycle à la fin de la discussion sur la loi Création et Internet ont été priés de passer immédiatement au vote, contrairement à l’usage. La loi a été adoptée, en attendant son passage en CMP puis au Conseil Constitutionnel.
On peine à en croire la démocratie dans laquelle on prétend vivre et écrire. Après 41 heures et 40 minutes d’une discussion passionnée sur le texte, il ne restait qu’une poignée de courageux députés autour de 22H45 jeudi soir lorsque l’Assemblée Nationale a décidé, sur instruction du secrétaire d’Etat Roger Karoutchi, de passer immédiatement au vote de la loi Création et Internet, qui n’était pas attendu avant la semaine prochaine. Un fait exceptionnel, qui permet de masquer le nombre important de députés UMP qui se seraient abstenus si le vote s’était fait, comme le veut la tradition, après les questions au gouvernment mardi soir. Ainsi l’a voulu Nicolas Sarkozy.
Quatre députés ont voté non (Martine Billard, Patrick Bloche et deux députés non identifiés), et une dizaine de mains se sont levées sur les bancs de la majorité pour voter oui. En tout, 16 députés étaient dans l’hémicycle au moment du vote.
[Via Google Translate: While the vote was not expected until next week, the few members in the chamber at the end of the discussion on the Creation and Internet law were invited to proceed immediately to vote, contrary to custom.The law was passed, until it passes then CMP in the Constitutional Council.
So one of the most important, and contentious piece of legislation in recent years is passed by trickery. In this way, those pushing this law have shown their true colours and their contempt for the democratic process.
The Cybersecurity Act of 2009 (PDF) gives the president the ability to “declare a cybersecurity emergency” and shut down or limit Internet traffic in any “critical” information network “in the interest of national security.” The bill does not define a critical information network or a cybersecurity emergency. That definition would be left to the president.
The bill does not only add to the power of the president. It also grants the Secretary of Commerce “access to all relevant data concerning [critical] networks without regard to any provision of law, regulation, rule, or policy restricting such access.” This means he or she can monitor or access any data on private or public networks without regard to privacy laws.
“We must protect our critical infrastructure at all costs—from our water to our electricity, to banking, traffic lights and electronic health records—the list goes on,” Rockefeller said in a statement. Snowe echoed her colleague, saying, “if we fail to take swift action, we, regrettably, risk a cyber-Katrina.”
The Secretary of Commerce – that would probably mean RIAA and MPAA could get an emergency declared when somebody uploads their grandchild singing Happy Birthday on Youtube. Or how about a “We must shut down access to [mumble] sites because it is critical to the morals of our society.”
and, for the real nerds reading this, did you know HSRP stood for “Homeland Security Routing Protocol”?
Since its release on Tuesday, Skype for iPhone has been downloaded more than a million times—that’s a rate of six downloads a second, according to the company. All this despite the fact the software only works via the iPhone’s Wi-Fi connection, and not AT&T’s 3G network.
That restriction has angered some, who have argued that the practice is anti-competitive. Those allegations have been turned up a notch now, as the Wall Street Journal reports that an Internet advocacy group called Free Press has asked the Federal Communications Commission to investigate whether or not the restriction is in violation of federal law.
The letter cites the FCC’s Internet Policy Statement (PDF link) which states that “consumers are entitled to run applications and use services of their choice” in order to “preserve and promote the open and interconnected nature of the public Internet.”
And if Apple gets off by saying a 3G network is not an Internet network but rather a digital telephony network through which the Internet can be tunneled, expect other providers like cable and DSL to make similar declarations to justify restricting what their users can put through their television delivery and wired analog telephony networks.