- Large US banks avoided reporting billions of dollars in losses by using an accounting maneuver to hold on to money-losing bonds until they matured, rather than selling them.
- Banks declared their intention to hold on to their money-losing bonds until maturity and then changed the bonds' accounting labels accordingly.
- The six large US banks identified by the Wall Street Journal changed the classifications on more than $500 billion of their bond investments last year.
- The banks' held-to-maturity bonds had a combined balance-sheet value of $1.14 trillion as of Dec. 31, up from $681 billion a year earlier, thanks to the reclassifications.
- The collapse of Silicon Valley Bank has drawn fresh attention to the decades-old debate over accounting rules that let companies show vastly different values for the same assets, depending on what they claim they intend to do with them.
As Interest Rates Rose, Banks Did a Balance-Sheet Switcheroo
Lenders pledged to hold on to money-losing bonds, allowing them to avoid reporting losses
Jonathan Weil
/cloudfront-us-east-2.images.arcpublishing.com/reuters/6W5WJY7T4NLKVFJO5JX37LPYS4.jpg)
/cloudfront-us-east-2.images.arcpublishing.com/reuters/OGBROYPEZVMVNLCKMBDIE2XJCE.jpg)
