Perfect storm is sinking markets. Wall Street banks are hiding bad property loans.

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Worries about the economy and a seemingly slow-footed response from the Fed, along with concerns over corporate earnings, dragged markets Monday.
Put that against the backdrop of a stock market with high valuation, and it had all the makings of a sell-off waiting to happen.
“It’s just a perfect storm of slowing growth, crowded positioning and risk-off sentiment that’s all coming to a head at the same time,” said John Belton, portfolio manager at Gabelli Funds.

Any number of suspects could be blamed for Monday’s market beatdown, ranging from worries about the economy and seemingly slow-footed response from the Federal Reserve to the unwind of a popular global currency trade and concerns over corporate earnings.

Those all played a part in some shape or form, and each helped tell a story of a shifting investing landscape that likely has not fully played out fully.

“This is very much a regime shift that is affecting sentiment in a big way,” said Robert Teeter, chief investment strategist at Silvercrest Asset Management. “The market got a little bit ahead of itself in that run-up that it’s had. Now we’re correcting back to where we were in April and May, and it’s been a violent correction because it’s been a very big wake-up call.”

https://www.cnbc.com/2024/08/05/here-are-all-the-reasons-why-mondays-major-market-wreck-is-happening.html

Are Banks Sweeping Dud Property Loans Under the Rug?
New accounting rules should give investors an earlier warning, but surprises are cropping up and there could be more to come

After the last major financial crisis, when scores of banks failed or took government bailouts while sporting seemingly pristine balance sheets, America’s accounting rule makers got working on a new system for reporting credit losses that was supposed to make lenders recognize them more quickly.

That new set of rules has been in place for a little over four years. Investors could be forgiven for wondering if it is working any better than the former one.

The old system was called the incurred-loss model. To book a loss, a lender had to conclude it was “probable” that one had already happened. The term “probable” wasn’t defined numerically, but the bar was widely interpreted to be very high—perhaps a 70% or greater likelihood. Bankers used to explain, conveniently, that they would have booked more loan losses, if only the rules would have let them.

https://archive.is/MVbh3#selection-5843.0-5857.427