ML-Implode News - U.S. Banks Bigger Than GDP as Accounting Rift Masks Risk

Applying stricter accounting standards for derivatives and off-balance-sheet assets would make the banks twice as big as they say they are -- or about the size of the U.S. economy -- according to data compiled by Bloomberg.
"Derivatives, like loans, carry risk," Hoenig said in an interview. "To recognize those bets on the balance sheet would give a better picture of the risk exposures that are there."
U.S. accounting rules allow banks to record a smaller portion of their derivatives than European peers and keep most mortgage-linked bonds off their books. That can underestimate the risks firms face and affect how much capital they need.

Relevant:

U.S. Banks Bigger Than GDP as Accounting Rift Masks Risk