NEWS

In a November 11 column by Bloomberg writer David Reilly, the chairman of the Coalition of Private Investment Companies (CPIC) called a proposal to have a council of regulators that would determine banks’ accounting rules a “monstrous idea.”

CPIC’s chairman, James Chanos, “who has flagged numerous accounting frauds over the years including the one that ultimately brought down Enron Corp., is concerned investors will quickly forget this and other warnings from the implosion of the financial system.” Reilly writers.

“He doesn’t have to worry about banks missing this point. As Congressional debate over financial reform intensifies, banks are committed to ensuring that accounting rules serve their own needs.

“Their latest push concerns the possible creation by Congress of a council of regulators charged with overseeing firms whose failure might blow up the financial system. Banks want any such council, consisting primarily of banking regulators, to help determine how accounting rules are set, or have the power to shelve them during a crisis.

“The result would be more politicized accounting rules and a process that gives Congress a more direct way to influence what companies must tell investors. It would also mean investor interests take a back seat to those of the banking industry. “