Sir Nigel: reform accounting for banks

Sir Nigel Lawson, former chancellor of the exchequer, rails against the current regime for bank accounting this morning in the Financial Times.

"The auditing of banks’ accounts, however, is fundamentally flawed in itself. The IFRS accounting system itself has proved to be damagingly pro-cyclical, and the ability to pay genuine (and genuinely large) bonuses out of purely paper profits, which are never subsequently realised, is at the heart of both the bonuses that cause such public and political outrage, and the reason why bank management consistently does so well when bank shareholders do so badly."

He goes on the back a call from the Bank of England's Andrew Haldane for a radical rethink of bank accounting. Sir Nigel says: "He is absolutely right." Over to the International Accounting Standard Board. FSA chief Adair Turner is also backing this. Difficult to know whether its getting some traction.


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