Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, May 1, 2007

"Gain on Sale" Accounting at Subprime Lender

The role of funny accounting in the demise of New Century Financial, the subprime mortgage lender now in bankruptcy, is analyzed in the New York Times article today.  "Gain on sale," which achieved notoriety in Enron, reports profits before they actually exist and may be used to hide losses.  See NYTimes, Accounting Said to Hide Lender Losses.

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