Banks caused credit crunch: accounting expert
One of the world's top accounting rule makers has said that the banks have no-one to blame but themselves for the current credit crisis and that even after this ends there will be more failures. Bob Garnett, a member of the International Accounting Standards Board, said that the approximate $US379 billion ($394 billion) in losses and asset write-downs reported by the globe's largest banks and securities firms since the start of 2007 were the result of greed, a short-term focus and a reliance on developing complex instruments. While the banks are looking to be bailed out, Mr Garnett said that it is the investors who are suffering the most. “It seems odd to me that someone can lend money to somebody whose property is perhaps not worth the value of the mortgage being offered; that the interest rate being charged is below the normal rate, and that the individual doesn't have the income to repay the loan.” He said that it was strange that this could then be repackaged as a AAA investment.
Source: Sydney Morning Herald