Ritchie\’s High Horse!

E&Y and Lehman show that he\’s been right all along of course. Thus accounting and auditing should be changed to suit his interests.

Slightly sad that he sets off with this:

…and it was used thereafter without further question arising to deliberately misrepresent the true nature of the balance sheet of the entity.

That sounds shocking expect for one thing – this is what happens day in, day out, the whole world over.

This is what securitisation was about.

….

Derivative trading is often intended to achieve such goals…

Oh, and there\’s me thinking that securitisation was about, well securitising. Passing on bundles of loans from originators to long term holders. And that derivatives trading was about the management of risk. Hedging oil prices for airlines, that sort of thing.

There\’s a certain difference between \”something naughty has been done\” and \”because something naughty has been done everything I don\’t like is wrong and naughty\”.

Ritchie really does seem to be stuck on the second here.

2 thoughts on “Ritchie\’s High Horse!”

  1. “This is what securitisation was about.”

    Securitisation was mostly just banks doing what regulations pushed them to do. When the first Basel Accord made banks hold minimum capital as a percentage of loan value, it created an incentive to sell those loans to non-banks, who could hold them without being subject to capital requirements, thereby reducing the cost of doing business.

    It’s just a good old fashioned unintended consequence of regulation. The problem with Ritchie is that he’s the kind of person for whom there is no such thing as an unintended consequence; the blame always lies with the regulated for only following the rules, rather than second guessing the intention of the near-sighted regulator and doing more than the regulations demand.

Leave a Reply

Your email address will not be published. Required fields are marked *