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The Fed Pause – Its Not Just About Economic Growth

The Fed Pause – Its Not Just About Economic Growth

by Rick Turoczy on August 23, 2006

Yet in what is shaping up to be one of the greatest ironies of legislation gone awry the Sarbanes-Oxley bill, originally designed to protect consumers from such financial fiascos as Enron and Worldcom may be preventing banks from setting aside sufficient loan reserves against these possible defaults. In a recent article entitled “Has Congress Sparked a Banking Crunch?” MoneyCentral columnist Jim Jubak noted that “the Sarbanes-Oxley accounting reforms have made it just about impossible for banks to prepare for the credit cycle’s turn. Accountants and the Securities and Exchange Commission (SEC) are applying Sarbanes-Oxley in a way that forces banks to cut reserves for delinquent and bad loans just when they need to put money aside for the rainy days that will come.”

The Fed Pause – Its Not Just About Economic Growth

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