Bank Accounting & Finance articles from April 2008

Bank Accounting & Finance archives from April 2008

Securitization accounting: are you ready for the credit crunch challenge? Under FAS-140, what flexibility do servicers have to address delinquencies and defer foreclosures?
April 1, 2008... Accounting for securitization transactions can be complicated and perplexing even at the best of times. And now is anything but the best of times. Rising interest rates, declining real estate values and a softening economy deepen worries about...

Stock valuation using fair-value accounting data: the use of fair-value data for stock valuation may reduce the emphasis on short-term income and increase the focus on total returns.
April 1, 2008... The value of a stock is effectively the sum of two components: 1. The value of the existing business on the company's books 2. The value of the future business that will be added by the company (sometimes referred to as the intangible...

A framework for governance, risk management and compliance: compliance and operational improvements are complementary and should happen in tandem.
April 1, 2008... Compared to other industries, banks do quite well in security governance and risk management. A November 2007 report by the Aberdeen Group, Security Governance and Risk Management: The Rewards of Doing the Right Things, and Doing Things Right,...

U.S. subprime crisis: risk management's next steps: low interest rates, an optimistic view of home prices and creative financial structuring created subprime mortgage euphoria.
April 1, 2008... The financial industry is hard at work trying to move beyond the problems that surfaced in 2007. More than $120 billion in subprime losses or write-downs were reported by financial institutions as of mid-January 2008. (1) Optimists contend the...

Back testing interest rate-risk models: while model error is unavoidable, input and output tests can make a difference.(Risk Measurement)
April 1, 2008... Prudent risk managers should not make any decisions about their rate-risk exposure unless they have confidence that their models are at least reasonably accurate. Of course, most risk managers are quite confident. The question is, do they have...

Economic value of equity for community banks: EVE gives banks a long-term view of interest rate risk.(Community Banking)
April 1, 2008... Economic value of equity (EVE) is an important tool for regulatory compliance. EVE is perhaps more important, however, for long-term interest rate risk and overall balance-sheet management. Community banks are familiar with using income...

Some evidence on optimal hedging and futures expiration choice: the standard deviations of both the spot and futures interest rates are nonconstant.(Asset/Liability Management)
April 1, 2008... Risk hedging is an important function of the financial markets. A typical hedging application occurs when an investor has a long position in treasury bonds and is concerned interest rates will rise. To protect against bond losses, the investor...

SEC staff issues help for expensing employee stock options and on reporting internal controls over financial reporting: eligible public companies may continue to use a simplified method for estimating the expense of stock options if historical experience is lacking.(SEC Update)
April 1, 2008... The staff at the Office of the Chief Accountant and the Division of Corporation Finance of the Securities and Exchange Commission (SEC) recently issued a new Staff Accounting Bulletin (SAB) to assist public companies in valuing stock option...

Managing information privacy: information security and privacy functions should be integrated to protect customer and employee data.(Data Security)
April 1, 2008... Information privacy is a critical issue for financial institutions. Within the past 12 months, numerous banks have reported breaches resulting in the loss of employee and customer nonpublic information. This article explores privacy regulations...

Understanding the costs of point-burner campaigns: differentiate between liabilities and expenses when planning point-burner campaigns.(Card Loyalty Programs)
April 1, 2008... It's a common scenario: The chief financial officer is nervous because the point liability reserve associated with your company s loyalty program continues to increase every year. As a member of the accounting department, you put pressure on...