The Phaserl


Economists Warn Depositors May Be Burnt In Bail-Ins (Part III)

by Mark O’Byrne, Gold Core:

Below some leading economists and financial commentators in Ireland give their perspective regarding the risks of bail-ins. If you manage money in any way, your own or others, it will be prudent to heed their warnings.

“The recent abatement of the euro area crisis and the reduction in overall global financial uncertainty have led to a decline in the demand for gold as a safe haven instrument and speculative asset.

This is the good news. In line with more normalised demand for gold and the precious metals, the risk hedging properties of these assets remain intact and require continued and structured approach to their inclusion when building a diversified, long-term focused investment portfolios.

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1 comment to Economists Warn Depositors May Be Burnt In Bail-Ins (Part III)

  • rich

    Book-Cooking Bank Gets to Keep Cooked Books

    Here’s a not-so-comforting lesson for investors, courtesy of the Securities and Exchange Commission. Just because the SEC says a company’s earnings were fraudulent doesn’t mean the company will ever be required to correct them.

    The SEC this week accused Fifth Third Bancorp of committing accounting fraud during the height of the 2008 financial crisis. The company agreed to pay a $6.5 million penalty to settle the agency’s claims.

    The funny part: Fifth Third, which is Ohio’s largest bank, has never acknowledged to this day that its numbers were in error. The SEC isn’t requiring it to do so now. A Fifth Third spokesman, Larry Magnesen, said the company considered whether it needed to do a financial restatement and decided it didn’t.

    Reasonable people might disagree about whether Fifth Third committed fraud. Per the usual protocol, Fifth Third neither admitted nor denied the SEC’s allegations. Yet it’s beyond belief that the company never had to set the record straight about its financial statements. Fifth Third first disclosed the SEC’s investigation in its 2010 annual report. So the bank has had a few years to revise its figures.

    Surely an accounting error that is fraudulent also should be deemed material by SEC. Yet the agency isn’t treating it that way. An SEC spokesman, John Nester, declined to comment.

    According to the SEC’s Dec. 4 administrative order, Fifth Third’s loss for the third quarter of 2008 would have been more than twice what it reported, had it complied with generally accepted accounting principles. The bank had been trying to sell some troubled commercial real-estate loans that had plunged in value. However, it continued to classify the loans as “held for investment” instead of “held for sale.” This let the bank avoid a $169 million writedown that quarter. Fifth Third reclassified the loans the following quarter. It sold most of the loans at issue in December 2008 and in 2009.

    wonder how many banks have larger similar accounting irregularities??????

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