So were the company's links with the obscure off-balance-sheet partnerships that were subsequently to trigger its downfall.
Since the eruption of the Enron scandal, Andersen has borne the brunt of an outsized portion of criticism for the company's failure because it certified as fair and accurate Enron's financial reporting--including its use of off balance sheet partnerships to disguise the level of Enron's true indebtedness.
Yet regulators (such as Consob, which regulates Italy's stockmarket) and sophisticated financial institutions not only failed to spot the trouble, but also let it get worse, overseeing a spiral of debt issuance and off-balance-sheet deals that allowed Parmalat to keep up its pretence.
In February 2010, Greece admitted that through assistance from Goldman Sachs, it used off-balance-sheet transactions to hide its deficit and national debt.
New Constructs includes off-balance sheet debt in all of its reports and adjusts the reported earnings of all companies for this misleading accounting practice.
FORBES: Off-Balance Sheet Debt: Bad Enough That FASB Notices, Maybe You Should Too?
The outcome, eventually, was a rule by which a company can keep a special-purpose vehicle off its balance sheet as long as an independent third party owns a controlling equity interest equivalent to at least 3% of the fair value of its assets.
Although Mrs Fastow filed false tax statements and created and administered an off-balance-sheet special-purpose entity that Enron used to hide its control of some Californian wind farms, some reports have claimed she was an innocent who fell under the malevolent influence of her husband.
While moving many auto loans off its balance sheet, GMAC is also pumping more capital into its fast-growing mortgage and insurance businesses, which generate higher margins than auto financing.
On the other hand, weakening consumer credit in America and uncertainty over its exposure to off-balance-sheet assets will add to the subprime worries.
The amount of loans treated this way is unclear because nobody centrally collates the data, and Fitch says its three trillion yuan estimate for off-balance-sheet credit is rough.
The sector may be paying a price for its cleverness, and for all those complex products and-off balance-sheet vehicles that seemed to be working so well in the good years.
This is a company with off balance sheet debt that is over 60% of its net assets, write-downs that are over 25% of net assets, and after-tax profits that have been declining.
Continued pressure on its capital levels, however, because of its exposure to rising consumer credit costs, leveraged corporate loans, off-balance sheet conduits and structured products, will force him to seek new capital sooner rather than later.
Santander should rightfully take its bow alongside its regulators, who closed off the capital benefits of building up big off-balance-sheet positions and required Spanish banks to put aside provisions during the upswing.
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