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A Banking Accountng Scam

April 6th, 2009 No comments

I just read in NR that some big banks have realized that they can improve their balance sheets by buying toxic assets from each other in a tit-for-tat way at inflated prices. Suppose Apex and Brydox each have bonds worth $20 on the market, and on their balance sheets. Apex sells one to Brydox for $100, and Brydox sells one to Apex for $100. Now they can mark up their assets by $80 each.

Categories: accounting, bailout, banks, g406 Tags: