Mike Dwight
VIP Member
- Jul 23, 2017
- 1,756
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- #1
Many are aware that around 2000, in the Economic world was rocked by the Mortgage Crisis. Accounting is particularly shocked with the crash of one of the Big Five Accounting Firms, Arthur Anderson. In fact this became the Big Four, instead. The Accounting Scandal produced the Sarbanes-Oxley act of 2001. This act serves to improve accountability within the reporting standards for Accountants. The US has also been moving toward IFRS, the International Standard, and away from GAAP accounting, or the Generally Accepted Accounting Principles.
Lehman brothers and countless financial institutions were invested in CDO. Collateralized Debt Obligations. These tradable Securities were rated AAA. Why was this? A complicated formula, whose only purpose was obtuseness and obfuscation, would hide tiny portions of uncollectable mortgages with the good mortgages. These CDOs would be sold overseas as well as AAA blue-chip safe investments. Most of these would lose their value and the Housing market would crash.
Anybody have any interesting notes from the lessons of this economic time period?
Ooops the Mortgage Crisis actually occurs in 2007-2009. I'm mixing financial incidents. I was thinking about the 2002 timeframe. I remember Lehman Brothers went under with all its stock.
Lehman brothers and countless financial institutions were invested in CDO. Collateralized Debt Obligations. These tradable Securities were rated AAA. Why was this? A complicated formula, whose only purpose was obtuseness and obfuscation, would hide tiny portions of uncollectable mortgages with the good mortgages. These CDOs would be sold overseas as well as AAA blue-chip safe investments. Most of these would lose their value and the Housing market would crash.
Anybody have any interesting notes from the lessons of this economic time period?
Ooops the Mortgage Crisis actually occurs in 2007-2009. I'm mixing financial incidents. I was thinking about the 2002 timeframe. I remember Lehman Brothers went under with all its stock.
