"Dynamic Provisioning" LOL

You’ve heard the whispered allegations about how GE used to manage their earnings, setting aside that extra penny-per-share in case they needed it to get through a future quarterly report?  I have no idea whether or not that’s true, but that seems to be the common knock on Jack Welch’s legacy among the chattering classes.

Anyway, how about if an entire country’s worth of banks decides to play that game with their P&Ls?  According to Bloomberg’s Jonathan Weil, that’s exactly what happened:

Only a few years ago, Spain’s banks were seen in some policy-making circles as a model for the rest of the world. This may be hard to fathom now, considering that Spain is seeking $125 billion to bail out its ailing lenders.

But back in 2008 and early 2009, Spanish regulators were riding high after their country’s banks seemed to have dodged the financial crisis with minimal losses. A big reason for their success, the regulators said, was an accounting technique called dynamic provisioning.

By this, they meant that Spain’s banks had set aside rainy- day loan-loss reserves on their books during boom years. The purpose, they said, was to build up a buffer in good times for use in bad times.

This isn’t the way accounting standards usually work…

Keep Reading:

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. immediate edge review commented on Sep 13

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2012/06/15/dynamic-provisioning-lol/ […]

  2. Zeitarbeitsfirma Pflege Rostock commented on Sep 15

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2012/06/15/dynamic-provisioning-lol/ […]

  3. cuanto esta el bitcoin commented on Sep 29

    … [Trackback]

    […] Here you can find 21201 more Info to that Topic: thereformedbroker.com/2012/06/15/dynamic-provisioning-lol/ […]

  4. Mossberg Guns for Sale commented on Oct 14

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2012/06/15/dynamic-provisioning-lol/ […]

  5. what is digital transformation commented on Nov 18

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2012/06/15/dynamic-provisioning-lol/ […]

  6. wig commented on Jan 14

    … [Trackback]

    […] Find More Information here on that Topic: thereformedbroker.com/2012/06/15/dynamic-provisioning-lol/ […]

  7. replica watches commented on Jan 20

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2012/06/15/dynamic-provisioning-lol/ […]