We're not much given to publishing rumored appointments at CFO.com, for the mostly self-interested reason that we'd often end up being wrong.
But I've been very politely nudged by our friend, accounting professor and blogger David Albrecht, to acknowledge that
Bloomberg — echoed by the the NYSSCPA, among others — has reported that new SEC Chair Mary Schapiro is considering current PCAOB member Charles Niemeier as a candidate for SEC Chief Accountant.
I contacted Niemeier, who was very gracious, but declined to comment.
I sat down with Niemeier at the CFO Rising West conference last October to talk about his concerns about IFRS — you can view that video interview here.
Listening to Niemeier talk leaves little doubt in my mind that his appointment would return the U.S. to a gradual reconciliation of IFRS and US GAAP that would likely take the better part of the next decade. Schapiro has already distanced herself from Cox's timetable, so there's a certain logic to the rumor.
IFRS aside, Niemeier served in the past as Chief Accountant in the SEC's Division of Enforcement, so his elevation to the top accounting spot would make sense, particularly given Schapiro's need to establish herself as a tough enforcer.
Many CFOs have been understandably preoccupied with the fate of their bankers and their banking relationships. But in the rush to shore up what still exists of their credit lines, some may be missing another financial-services industry risk suddenly looming on the horizon: the risk that the carrier you insure your property and liability perils with suddenly might not be able to pay your claims.
First, there was the collapse of AIG, the biggest name in insuring corporate risk. Sure, insurance experts and AIG execs were convincing in explaining that the collapsed financial services giant's property-casualty business was solid as a rock.
Some risk managers even said that the eagerness with which AIG property-casualty would cut prices to hang on to their customers might drive prices down even lower than they've been. Yet at this late date, is it necessary to remind buyers what the consequences of such a race to the bottom might be in terms of insurer solvency?
Now comes more reason for worry in the form of reports of growing shakiness at The Hartford Financial Service Group, another major handler of corporate insurance and risk management programs. Yesterday, the group lost access to the Fed's commercial paper lending facility after recent commercial paper downgrades by Moody's, Standard and Poor's and Fitch and saw its shares plummet 11 percent, according to Reuters. "As a result it will have to tap other sources of cash to repay the debt, a potential thorn as its capital had already eroded due to large losses over the past two quarters," the news service reported.
Insurance regulators are prone to make assurances in such cases that the loss reserves of even wobbly insurers are more than adequate to pay off claims. But in today's climate, I wouldn't take such assurances to the, er, bank.
Some people find it easier to concentrate at work with music or talk radio playing in the background. Today, CFO's London office ambience was banker bashing, courtesy of a testy hearing of the British Parliament's Treasury Select Committee. In the line of fire were the former CEOs and chairmen of RBS and HBOS, two of the larger U.K. casualties of the banking crisis to date.
Running at more than three hours, the recently concluded exchange with parliamentarians will provide plenty of fodder for tomorrow's papers. Already, news websites are seizing on the apologies offered at the outset of the meeting, such as former RBS chief executive Sir Fred Goodwin offering a "profound and unqualified apology for all the distress that's been caused."
If you're in the mood for schadenfreude, the archived video of today's meeting is here. Episode two of "Harangued at the House of Commons" airs tomorrow, featuring the current heads of Barclays, RBS, Lloyds, Abbey and HSBC.
As the American, British and German governments debate the formation of a "bad bank" to breathe life into financial institutions, the retail sector - in the UK, at least - is showing politicians that the private sector can build up its own collection of "bad shops" all by itself.
Through their Shop Direct Group, the UK's Barclays brothers, who also own the Daily Telegraph newspaper, bought the collapsed retailer Woolworths' brand name and its childrenswear brand Ladybird for an undisclosed amount. Shop Direct plans to relaunch the business as an online-only retailer, competing with the likes of Amazon, whose holiday sales were the envy of brick-and-mortar retailers. Shop Direct has some experience in this area: it bought another UK retail dinosaur, Littlewoods, in 2004, sold its stores and transformed its online business, with web sales rising three-fold.
The deal for Woolworths was on the basis of little more than the sentimental value of the brand. Customers have known for some time that these shops were on a slow path to more downmarket fare, and the shops themselves hardly pretended otherwise. The same could not be said of the once-glittering investment banks now hoping to pawn mortgage-related securities off to a taxpayer-funded "bad bank."
What's more, the banks say that their assets are merely troubled, when they are possibly worthless. At least a "bad shop" will have inventories that are physically actually worth something. And they are definitely marked-to-market, judging by the massive discounts offered on everything, including the fixtures and fittings during a shop's dying days.
The government can still get in on the act though if it hurries. At the time of writing, Zavvi, MFI, Barratts, Viyella, Land of Leather, Waterford Wedgwood, and many other prominent names in British retail are still up for grabs. If the government created a one-stop "bad shop" to remove unwanted leather sofas, toys, baby clothes, shoes and the like from retailers' warehouses, perhaps it could allow retailers to reinvent themselves in one fell swoop. And all that stock could one day come back into fashion, unlike the figuratively more "toxic" securities on banks' balance sheets.
Following the news of an uptick in corporate bond issuance here comes a report in the Financial Times that the Europeans are doing it too. European companies outside the financial sector sold $15.2 billion worth of bonds last week, one of the largest weeks ever for bond issuance, the paper reported, citing Dealogic, a data provider.
Bank lending, of course, is in the throes of a global drought. Today, for instance, Moody's reports that companies in the relatively strong U.S utility sector are facing an extreme tightening of terms in their revolving credit facilities. In the face of the loss of one of the major sources of capital, the FT reports, European companies with substantial amounts of debt to refinance have been turning to another source: the bond markets. And U.S. companies like Staples, the stationery retailer, and printing company RR Donnelley are recent issuers.
On the supply side, investors seem to be interested, too. Despite falling interest rates, investors—who, after all, have to park their money somewhere— are showing signs of an appetite for corporate bonds.
Even the moribund junk-bond market is showing signs of life: Last Thursday, Fresenius, a German health-care company, successfully sold the first junk-rated, euro-denominated bonds in more than 18 months, the newspaper reported.
To be sure, the contraction on the banking side is much greater than the loosening among corporate-bond investors. Still, it's a heartening sign that there's still a pulse somewhere in the capital markets. On a deeper level, the growth of a desire by bond investors for at least some yield suggests that there still might be a little juice left in capitalism's currently sputtering engine of supply and demand.
Video
