by Calculated Risk on 6/19/2008 12:02:00 AM
Thursday, June 19, 2008
The WSJ is reporting that banks are changing their accounting rules to make their numbers look better. (hat tip Brian)
The article gives Astoria Financial Corp. as an example. At the end of 2007, Astoria reported $106 million in nonperforming loans, and by the end of March 2008 nonperforming loans had declined to $68 million. The reason for the improvement: Astoria redefined nonperforming loans as missing three payments, instead of two.
And another example:
Wells Fargo ... had written off home-equity loans ... once borrowers fell 120 days behind on payments. But on April 1, the bank started waiting for up to 180 days.This is a significant change considering the size of Wells Fargo's HELOC portfolio ($83.6 billion) and heavy exposure to California.