Wall Street is up to its old tricks again, juggling the books to make their levels of debt appear lower at the end of the quarter which….drum roll please….increases their bonuses:
“Goldman Sachs, Morgan Stanley, J.P. Morgan Chase, Bank of America and Citigroup are the big names among 18 banks revealed by data from the Federal Reserve Bank of New York to be hiding their risk levels in the past five quarters by lowering the amount of leverage on the balance sheet before making it available to the public, The Wall Street Journal reported.
…There is nothing illegal about the practice, though it means that much of the time investors can have little idea of the risks the any bank is really taking.”
…“You want your leverage to look better at quarter-end than it actually was during the quarter, to suggest that you’re taking less risk,” William Tanona, a former Goldman analyst and current head of U.S. financials research at Collins Stewart, told The Journal.
Some things never change.