Banks fear new $5,000bn balance burden

"Accounting changes could force US banks to take thousands of billions of dollars back on to their balance sheets in the coming months in a move that is likely to curb further their lending and could push them into new capital raisings, analysts have warned."


"The off-balance sheet vehicles have been used by financial institutions to keep some assets off their balance sheets, thereby avoiding the need to hold regulatory capital against them."

Very cleaver idea, do I smell some ENRON cooking oil here? Banks have barely "sufficient" capital without this exercise. It means that they will have to raise further capital to accommodate this new risky assets, diluted earnings will go further down, guess what will happen to valuation?


http://us.ft.com/ftgateway/superpage.ft?news_id=fto060320081838383099