Creating transparency in the market would be more effective at restoring
public confidence than changing accounting rules, a former US Securities and
Exchange Commissioner has argued.
Roel Campos, a former commissioner, made the comment in an address to
accountants and senior banking executives at the International Federation of
Accountants’ World Accountancy Forum in New York yesterday.
His comments come on the back of banks writing down massive profits following
subprime losses owing to subprime debt which was not held on the balance sheet.
‘The regulator’s tools for the most part are disclosure. I don’t know that it
is appropriate to expect regulation, regulators, and standard setters to
essentially prevent the next restructuring or subprime mortgages,’ he said,
responding to a question from Financial Accounting Standards Board Chairman
Herz had told the conference: ‘Maybe there is a different way of thinking
about the risks in the system and how to govern the financial system. I don’t
know where the balance is, but we’re somehow not getting it right,’ said Herz.
Loose lending standards, rising interest rates in 2005 and 2006, and falling
house prices led to an increase in the number of less-credit-worthy U.S.
borrowers and contributed to a U.S. housing market slump,
Thousands of Americans with weak credit who obtained so-called subprime
mortgages have defaulted on their loans and lost their homes.
Herz said he felt the subprime issue had damaged the reputation of U.S.
‘I have to tell you, when I go abroad nowadays, we’re losing credibility,’ he
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements
Charles Tilley's departure from CIMA leaves the accounting world quieter, but his institute with an exciting foundation