PwC and E&Y Drawn Into Sub-Prime Rabbit Hole

Et Tu, Paribas?

“The dead bodies keep floating to the surface in the subprime credit market contagion, yesterday hitting France’s largest bank, BNP Paribas, and sending global equities into a swoon. The question going forward is whether the world’s regulators and central bankers know how to contain this incipient financial panic.

The European Central Bank took a sensible step yesterday, pumping €94 billion of short-term liquidity into the system. This lender of last resort role is appropriate for a central bank when credit markets seize up, as they did yesterday after BNP Paribas froze three of its asset-backed securities funds. Several other European banks have also reported losses from the subprime debt market, and amid so much uncertainty a surprise like the one at Paribas can all too easily trigger a full-fledged global run. Mr. Trichet’s job is to restore trust and confidence, which he did well yesterday.”

The auditor for BNP Paribas is PwC.

At the time of the annual report, and again in early August, PwC and the Chairman of BNP were saying everything was fine.

BNP is big investor in Homebanc via the funds that closed.

E&Y is auditor for Homebanc.