Accounting seems so dreary but what if broken rules allow banks to show false profits, overstate capital and hide losses? What if the banks have paid bonuses out of unrealised gains?
The Bill I introduced in March 2011 deals with just those problems. All the details are here.
I learnt today that the Bank of England will make a statement on Thursday about bank balance sheets. I expect they will require assets to be written down and more capital to be raised. I hope they will explain why the International Financial Reporting Standards are unsuitable for banks and that they should be overridden by the standard compliant with UK companies law, known as “UK GAAP”.
If so, the Government should adopt my Bill.
Updated: Via the Daily Telegraph, Mervyn King to challenge bank accounting that fails to show true level of risk.