Last week, the news that some banker bonuses were paid out by accident, because of accounting errors, was really devastating for the European banking industry.
The headline “Billions of pounds of banker bonuses may have been paid out ‘by mistake'” could’ve driven anyone into a jealous rage, until they read the second and third sentences and figured out the good news:
The House of Lords Economic Affairs Committee, which is investigating the role of auditors in the financial crisis, was told that the controversial International Financial Accounting Standards (IFRS) had allowed banks to hide risks so that profits and bonuses were inflated.
The IFRS system of auditing the banks had had “a material cost to the taxpayer and to shareholders” because “as a result dividend distributions have been made and bonuses have been paid that were imprudent”.
Which is like, seriously? We already knew that. Huge phew.
But the only guy in the world who isn’t over the fact that auditors didn’t catch firms’ accounting principles and how that allowed for lots of risk and consequently inflated bonuses already, Iain Richards, who works at Aviva Investors, continued to speak about it like it was new, interesting news…
Mr Richards said: “The IFRS (system) is extremely pro-cyclical; it facilitated and exacerbated the credit bubble…There were some very clear risks inherent (in the banks)…the risks were extremely material.”
He told the Lords that rather than highlighting the problems, the accounting standards allowed the banks to look far more profitable than they were. The financial crisis exposed the shortfall that had built up.
… and meanwhile everyone else knew better and went on their merry way.
And now, there’s even better news. There’s been a surge in the UK property market in the past 2 weeks.
There has been a flurry of activity in the UK property market over the last two weeks.
Some people are smartly tying it to regular old banker bonus season.
The surge was fuelled by bankers, who have just received their hefty cash bonuses.
Others are tying it to the same circa ’07 bonuses that lone Iain Richards is speaking about above (which might be partly true because some of those are just getting paid out now)…
The research coincides with a report from the IFA which revealed that billions of pounds of banker bonuses may have been paid out ‘by mistake’ due to miscalculations caused by Britain’s flawed accounting rules.The House of Lords Economic Affairs Committee, which has been investigating the role of auditors in the financial crisis, has been told that the controversial International Financial Accounting Standards (IFRS) allowed banks to hide risks so that profits and bonuses could be inflated.
Of course, that’s all probably just a coincidence and it’s more likely that it’s just annual bonus season and bankers are going shopping. Great news for everyone who owns a home.