It’s morning in America and that means it's time for links to stuff I’m reading? Here goes:
You can’t possibly overstate this guy’s role at the Fed
At his news conference in June, Federal Reserve Chairman Ben Bernanke was jokingly asked by a reporter if Jon Hilsenrath of the Wall Street Journal is “the real power behind the throne.” Now we know who is. Jesse Eisinger of Pro Publica says it’s Scott Alvarez, also known as the “eighth governor.” He has been at the Fed since 1981 and general counsel since 2004. “The revolving door is often cited as a major problem in Washington, and it is,” Eisinger writes. “But it’s not the only one. Holdouts from the deregulatory era still carry weight in the capital.”
Greece needs more bailout money. Imagine that.
The International Monetary Fund says the shortfall this time is 11 billion euros. All Greek sovereign debt is owed to euro-area governments. From the Financial Times: ”The new report is the first time the IMF has raised the prospect of writedowns even larger than those agreed in December, and comes two months before Germans go to the polls, potentially causing problems for Angela Merkel, chancellor.” Because as we all know, nothing important can happen in the European Union until we learn the outcome of German elections. Give it a few decades, and this will all get worked out.
A Securities and Exchange Commission investigation into IBM’s accounting practices
I’m surprised this story hasn’t gotten more attention. Here’s the disclosure from International Business Machine’s quarterly report yesterday: “In May 2013, IBM learned that the SEC is conducting an investigation into how IBM reports cloud revenue. IBM is cooperating with the SEC in this matter.” The report didn’t provide any more details, which might mean the company doesn’t know anything more or maybe it just likes keeping investors guessing. Note that IBM used the word “investigation” instead of “inquiry.” Sometimes this is a tipoff that it’s a serious, formal probe. Anyway, the business of cloud computing is fairly new, and it seems there may be some confusion about how to apply existing accounting standards.
Speaking of numbers, the use of non-GAAP metrics is out of hand
By non-GAAP, I mean those numbers in companies’ earnings releases that don’t conform to generally accepted accounting principles or any other set of standards. Villanova University professor Anthony Catanach has a good post on his Grumpy Old Accountants blog: “Simply put, these supposedly innovative and insightful performance measures are neither! In fact, in most cases, they are quite the opposite, and actually mask real operating performance. My grumpiness on this `new’ disclosure business has reached the boiling point. I am so hot about this that I’m calling out today’s CFOs, as well as the Securities and Exchange Commission to stop this nonsense once and for all.” Thank goodness there are people out there this passionate about accounting.
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)