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CFOZone Experts

Opinions and views from expert CFOZone members.

Tag >> cost of capital
Aug 16
2010

A welcome end to operating leases

Posted by Ron F in leasingIFRSIASBGAAPfinancingFASBcost of capitalcomplianceCapitalbalance sheetAccounting

Ron F

I see that FASB is sticking to its schedule for ending most off-balance-sheet treatment for leases, and so is the IASB. It's about time, frankly, if only to spare us poor, I mean, intrepid financial journalists from having to sort through the particulars of the current accounting treatment a moment longer than necessary.

I speak from personal experience here, having wrestled with the false distinction between capital and operating leases for a sidebar to a piece I wrote for CFO Magazine way back when. The article delved into the details of a particularly complex variation that companies were using to finance real estate, called synthetic leases.

May 14
2010

My mea culpa over the May 6 market glitch

Posted by Ron F in Tradingstock marketSecurities and Exchange CommissionRiskRegulationMary SchapiroFinancedark poolscost reductioncost of capitalcomplianceCapitalBanksbanking industry

Ron F

I owe former Securities and Exchange Commission chairman Arthur Levitt a sincere apology as a result of last week's stock market glitch.

It seems increasingly clear that electronic trading systems are to blame for the mysterious 1,000 point intra-day dive. And as Floyd Norris thoroughly explains today, their dominance reflects a decision to replace human, market-making specialists with technology.

Apr 28
2010

Why corporate users of derivatives should favor reform

Posted by Ron F in RiskRegulationGoldman Sachsfinancial crisisfailurederivativescredit-default swapcost of capitalcorporate treasurersCFObanking reformbailoutsAIGAccounting

Ron F

It's hard to see why CFOs who want to use derivatives to hedge risk would oppose efforts to improve the transparency and collateral backing swap trades. But according to this New York Times article, such opposition persists.

As we reported last week, however, proposals to require trading of standardized derivatives through exchanges or at least settle the transactions through central clearinghouses would require counterparties to post more collateral but mitigate, at minimum, any increase in cost through narrower spreads between bid and asked prices.

Mar 27
2010

Galbraith vs. Greenspan: You be the judge

Posted by Ron F in unemploymentRiskRegulationrecoveryrecessionObamaMoody'sGreenspanfinancial crisisFederal Reserveeconomydowngradedefaultcost of capitalCongresscapital expendituresbanking reformbanking industry

Ron F

I see Bloomberg can't resist interviewing Alan Greenspan about the perils of federal budget deficits, because the former Maestro's crystal ball is just so marvelously clear that he accurately predicted the housing crisis, which he did nothing to create, and took majorly serious steps to forestall it.

Oh, none of that last clause is true? And the ex-Fedster went so far as offer the markets the "Greenspan put," which is the ultimate "too big to fail" deal when you think about it?

Mar 20
2010

Greenspan's own guru says he screwed up

Posted by Ron F in RiskRegulationmonetary policyFederal Reserveeconomycost of capitalcomplianceBenankeBanksAlan Greenspan

Ron F

Unlike much of the rest of the press, I tend to cover my ears whenever Alan Greenspan opens his mouth.

But I can't help but weigh in on his comments yesterday. In essence, he offered half of a mea culpa by saying regulation, but not monetary policy, was to blame for the financial crisis.

Dec 28
2009

The bank bailout disconnect

Posted by MQuinn in fat cat bankerscost of capitalBanksbailout

MQuinn

A blogger over at Zero Hedge seems as perplexed as I am over how easy it's been for banks that nearly brought the global economy to its knees to raise capital.

Investors are clearly clamoring to hold bank equity, as shocking as that might seem. You can thank the Federal Reserve's near-zero interest rate policy in part for that by once again making it look easy to borrow cheap and lend high.

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