Is UT in financial trouble thanks to Hammy?

#52
#52
utgibbs said:
Yes, Wall Street says this all the time.

The former SIGTARP recently said the next bailout would cost $5 trillion, and, of course, Bernacke has stayed on disaster's course since he inherited the mess from the Maestro (sic).

It's not like we aren't living in a historic era where "creative accounting" has caused and is causing all sorts of trouble.
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Related to the recent financial crisis, the accounting didn't create the trouble. People, facilitated by the investment bankers lust for selling mortgage backed securities (who in term hedged said securities with credit default swaps largely through AIG), buying houses they couldn't afford en mass, created the trouble.
 
#53
#53
At any given time there exists an inventory of undiscovered embezzlement in - or more precisely not in - the country's business and banks. This inventory - it should perhaps be called the bezzle - amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all this is reversed.
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#54
#54
I'm just wondering how all this could happen in a socialist enterprise like the UTAD
 
#55
#55
General Jack said:
Related to the recent financial crisis, the accounting didn't create the trouble. People, facilitated by the investment bankers lust for selling mortgage backed securities (who in term hedged said securities with credit default swaps largely through AIG), buying houses they couldn't afford en mass, created the trouble.
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Yes, but the creative accounting hid the shadow banking system underlying all of this. "The bezzle" in times of plenty was hidden. When it got tight, suddenly it was discovered the SIVs were actually part of the banks themselves, and so it unwinds, etc, etc, etc.

It is hilarious actually. Just to take your AIG example - they were selling insurance on "products" that have been blitzed by fuzzy math to be "securitized."

And let's remember Arthur Andersen and Enron were just the two biggest culprits in some just straight up and down book cooking.
 
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#56
#56
utgibbs said:
Yes, but the creative accounting hid the shadow banking system underlying all of this. "The bezzle" in times of plenty was hidden. When it got tight, suddenly it was discovered the SIVs were actually part of the banks themselves, and so it unwinds, etc, etc, etc.

It is hilarious actually. Just to take your AIG example - they were selling insurance on "products" that have been blitzed by fuzzy math to be "securitized."
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So the "widely known" stuff doesn't include anything about UT then?
 
#58
#58
utgibbs said:
Yes, but the creative accounting hid the shadow banking system underlying all of this. "The bezzle" in times of plenty was hidden. When it got tight, suddenly it was discovered the SIVs were actually part of the banks themselves, and so it unwinds, etc, etc, etc.

It is hilarious actually. Just to take your AIG example - they were selling insurance on "products" that have been blitzed by fuzzy math to be "securitized."
Click to expand...

The accounting is wasn't to blame. People buying houses they couldn't afford; investment bankers making massive profits on bundling and securitizing crappy mortgages; AIG making obscene fees on derivatives; all of those were to blame. In short, everyone was living the high life while the house of cards was being being built. Greed is to blame, not the accounting.

All bubbles burst, the bubble was reflected in any financial metric one would have card to pay attention to. Blaming the accounting is like blaming a stop sign that is not heeded by a reckless drive who causes a head on collision.
 
#59
#59
Somewhere along the way the auditors failed to properly evaluate the underlying value of the investment. Doesn't make them proximate cause, it does, however, make them a part of the problem. In your analogy, they are the stop sign that wasn't there.
 
#60
#60
volinasheville said:
Somewhere along the way the auditors failed to properly evaluate the underlying value of the investment. Doesn't make them proximate cause, it does, however, make them a part of the problem. In your analogy, they are the stop sign that wasn't there.
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Not necessarily, its not an auditors job to counsel their clients on the business case of a transaction, rather, to gain comfort that the financials are fairly stated. I mean seriously, you want some accountant coming in and telling you how to run your business? The balance sheets reflected the value at the time, the value was market driven and it was there, as reflected through transactions in the market; mortgage backed securities were being snatched up and everyone was getting rich. It was a bubble, driven by the market, just like the tech bubble in the late 90s. Back then, tech companies were wildly over-valued, but the stocks were being traded at obscene amounts, i.e. people were still buying. You can't blame accountants for the bubble in either case. The market created the bubble and no-one wants to listen to reason when they are getting rich.

Its fashionable to blame the accountants, and while there was plenty of blame to go around the root cause was greed, pure and simple.
 
#61
#61
i know this wouldn,t help much,but revoke any payments sceduald to go to hammy,pearl,raliegh,and fulmer they all help get ut in this mess so why should they get rewarded.
Posted via VolNation Mobile
 
#62
#62
VegasVol said:
From another often well-informed poster on another board:

"A decade without a system president will do that. When a division head (Athletic Director) is in over his head, he needs a strong boss to have a chance to succeed. With no one in charge, the UTAD debt level ballooned and the financial situation, in the words of an ex-UT president, are 'in shambles, built on smoke and mirrors.' Some places that pay their coaches much, much more than UT are in better financial condition. This, despite the oft-repeated mantra 'UT is one of the only athletics departments to make money.' You can defer and hide a lot of operating expenses with a credit card - until you reach the debt limit."

This is something that's been gurgling for a while, but no one ever wants to talk about the debt-leveraged "fundraising" (e.g., project-inspired donations with less funds coming in than the projects cost), and will likely be the last death-nail in the Hamilton legacy coffin. Wonder why ADs with Tennessee ties across the country are jumping out of their seats to say they DON'T want the Tennessee job?
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Can't wait to see MHF's response
 
#64
#64
General Jack said:
The accounting is wasn't to blame. People buying houses they couldn't afford; investment bankers making massive profits on bundling and securitizing crappy mortgages; AIG making obscene fees on derivatives; all of those were to blame. In short, everyone was living the high life while the house of cards was being being built. Greed is to blame, not the accounting.

All bubbles burst, the bubble was reflected in any financial metric one would have card to pay attention to. Blaming the accounting is like blaming a stop sign that is not heeded by a reckless drive who causes a head on collision.
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I'm not trying to blame accounting at all. Your analogy is EXACTLY right. And your culprit (greed) is spot-on. Accounting is just the tool to cover up what is actually going on.

In our case though, I believe it is Hambone's ability to shift money hither and yon, whether that money is there or not, that is at issue. And this "bezzle" will probably be revealed in the first quarter of the new AD's reign.
 
#65
#65
utvolpj said:
I'm just wondering how all this could happen in a socialist enterprise like the UTAD
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volinasheville said:
Somewhere along the way the auditors failed to properly evaluate the underlying value of the investment. Doesn't make them proximate cause, it does, however, make them a part of the problem. In your analogy, they are the stop sign that wasn't there.
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utgibbs said:
Ah, well. When your regulators are under the reign of Capital....
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Bingo.
 
#66
#66
Theres no way with the Bowl money and TV contract money that we or any of the top SEC schools should be in any kind of financial problems. Even with all the money were paying to ex coach's. But Obama definately hasnt helped anybody.
 
#67
#67
General Jack said:
Its fashionable to blame the accountants, and while there was plenty of blame to go around the root cause was greed, pure and simple.
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Bingo.

In our UTAD case though, I think we will discover that it was the ways in which Hambone got the accountants comfortable with the financials that will be the first headache for the new UTAD. Well, I'm forgeting the NCAA investigation.

Unlike Hambone's first days on the job when losing to Auburn and Georgia were the major problems.
 
#68
#68
utgibbs said:
Bingo.

In our UTAD case though, I think we will discover that it was the ways in which Hambone got the accountants comfortable with the financials that will be the first headache for the new UTAD. Well, I'm forgeting the NCAA investigation.

Unlike Hambone's first days on the job when losing to Auburn and Georgia were the major problems.
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I'll be very interested to know, if that's the case. Certainly wouldn't do anything to improve his legacy here; the financial side was the only feather left in his cap.
 
#69
#69
Chicken or egg? Bubble existed because the value of the portfolio of assets was overstated at origination level. No, I don't want an accountant to tell me how to run my business but an auditor does have safety and soundness obligations in order to certify that f/s present fairly the value of the assets and liabilities and that the profits claimed are real. If underwriting standards are a joke they shouldn't sign off on the value of assets, that would be what a loan loss reserve is designed to show. If they can't conclude on what that ought to be they shouldn't issue a clean opinion and they should communicate to the Directors and officers that they need to adopt sound lending policies and offer their services as consultants. If the D's and O's ignore them they have the ability to walk on the engagement after they do their own liability risk assessment. Money talks though, even accountants care about fee income in the end.

Again, they aren't proximate cause but they are responsible for at least some of the road signs to warn investors. The market is based on information and the accounting firms provide at least a portion of that info stream on which the market relies. The bubble was based on greed but also on information or the lack thereof.

We are only in disagreement as to whether they have some measure of blame or not. There is plenty of blame to go around as there always will be in any bubble.
 
#70
#70
volinasheville said:
Chicken or egg? Bubble existed because the value of the portfolio of assets was overstated at origination level. No, I don't want an accountant to tell me how to run my business but an auditor does have safety and soundness obligations in order to certify that f/s present fairly the value of the assets and liabilities and that the profits claimed are real. If underwriting standards are a joke they shouldn't sign off on the value of assets, that would be what a loan loss reserve is designed to show. If they can't conclude on what that ought to be they shouldn't issue a clean opinion and they should communicate to the Directors and officers that they need to adopt sound lending policies and offer their services as consultants. If the D's and O's ignore them they have the ability to walk on the engagement after they do their own liability risk assessment. Money talks though, even accountants care about fee income in the end.

Again, they aren't proximate cause but they are responsible for at least some of the road signs to warn investors. The market is based on information and the accounting firms provide at least a portion of that info stream on which the market relies. The bubble was based on greed but also on information or the lack thereof.

We are only in disagreement as to whether they have some measure of blame or not. There is plenty of blame to go around as there always will be in any bubble.
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Good analysis. One of the major issues was that the FASB wanted all securitizations to 'mark to market' annually or as changes occurred in the debt market; regardless of the underlying performance of the security. So if Company X gets a wild hair and starts underwrting loosely resulting in increasing troubled assets - it affected Company Y that did everything by the book. This affected all banks, insurance companies, investment houses, etc. except - unregulated hedge funds - which were the primary buyer of many of the debt securities. So the hedge funds squeeze the rating agencies to lighten up or else they won't be making big fees from the review of securitizations they plan to buy. The less scrupulous underwriting originators tailored the underwriting to what the hedge funds could sell to their investors. The "accountants" (FASB) said stick it in your ear Hedge Funds we think you are overstating values of the securities, which will bleed over into the regulated investment community. So we are going to push the govt, to regulate you. The tug of war continued for years while Rome burned and the rating agencies took two black eyes.

UTAD does not have a dog in that hunt. State regulated investment of funds required. The overall landscape affects returns though.
 
#71
#71
VegasVol said:
From another often well-informed poster on another board:

"A decade without a system president will do that. When a division head (Athletic Director) is in over his head, he needs a strong boss to have a chance to succeed. With no one in charge, the UTAD debt level ballooned and the financial situation, in the words of an ex-UT president, are 'in shambles, built on smoke and mirrors.' Some places that pay their coaches much, much more than UT are in better financial condition. This, despite the oft-repeated mantra 'UT is one of the only athletics departments to make money.' You can defer and hide a lot of operating expenses with a credit card - until you reach the debt limit."

This is something that's been gurgling for a while, but no one ever wants to talk about the debt-leveraged "fundraising" (e.g., project-inspired donations with less funds coming in than the projects cost), and will likely be the last death-nail in the Hamilton legacy coffin. Wonder why ADs with Tennessee ties across the country are jumping out of their seats to say they DON'T want the
Tennessee job?
Click to expand...

No chance, Hammy proved he stinks at hiding things.
 
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