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The Government should now adopt my bill on bank accounting

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 […]

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Two simple steps to transform the culture of banking and to forestall the next outrage

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It’s time to privatise commercial risk in banking and insist on prudent accounts. Government should: Eliminate moral hazard from the financial system by implementing this measure to make bank directors strictly liable without limit and to treat as capital both directors’ personal bonds and, for five years, the bonus pool. Introduce prudent bank accounting so banks can’t game the rules using derivatives to manufacture illusory profits from unrealised cash flows. The banking system isn’t capitalist It’s not capitalism when private individuals […]

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