On February 28 the US Justice Department fined Deloitte & Touche LLP $149.5 million for alleged fraud against the government related to its role as the independent outside auditor of Taylor, Bean & Whitaker Mortgage Corp. Also: The damages phase of the FDIC v. PwC case regarding Colonial Bank is set to begin in Washington DC on March 20.
The KPMG/PCAOB scandal is neither the first or last time a Big 4 firm reminded us that there’s nothing special anymore about being a Big 4 firm professional The firms, and their partners, are not capitalist eunuchs, immune from perverse incentives that advocates for free markets say, if big enough, can corrupt anyone.
Bank regulators should start hiring the consultants that are responding to bank regulatory sanctions, consent decrees and NPA/DPA legal orders directly, and also strictly monitor them. It’s time to change for regulators to change their approach before another waste of time, money and public trust occurs.
I’ve recently published two pieces for Chicago Booth Capital Ideas Blog on stock options backdating and bank stress test disclosure. Take a look!
Should audit and auditor failure be solely defined by identified material misstatements that result in restatements, and internal control failures? I don’t think so but Jay Hanson, PCAOB Board member, said so recently.
I’ve been a part of Eric Jackson’s annual “picks” post for Forbes for the last few years. Take a look at my “sleeper ideas” for 2014.
It’s easy to forget, with all the propaganda being published by major media, why these Fed/OCC consent decrees were issued in the first place. The fact that a borrower may be in default does not negate the overwhelming evidence that court cases have provided that banks proceeded fraudulently and illegally in some foreclosures and looted those borrowers and institutional investors in mortgage securities by charging fraudulent and illegal fees in the process.
I asked Alys Cohen of the National Consumer Law Center what I can say when people ask me what to do about their foreclosure or mortgage modification nightmare.
My column at American Banker last week focused on the latest PCAOB inspection report for KPMG. We’ve got three more “Big Four” inspections reports to come – Ernst & Young, Deloitte and PwC. Don’t be surprised if you see the same focus on loan loss and repurchase reserves and the same kinds of auditor deficiencies.
My latest column at American Banker was published online on Monday and discussed some of the reasons, I think, why bank auditors are missing or consciously ignoring increased risk and poor to no controls.
I’ve put a new column up at Forbes this morning, “Barclays Manipulates Libor While Auditor PwC Snoozes.”
The Barclays Libor manipulation scandal is a big deal and we haven’t yet seen the full impact here in the U.S. The Chairman of the bank resigned officially this morning and the interim Chairman is none other than our old friend Sir Mike Rake, former Global Chairman of KPMG.
My column today at American Banker is about the PCAOB’s auditor rotation and auditor independence concept release and its impact on banks. My favorite lines are…