A Financial Times story with the cheeky headline “Latest acronym VIEs for Wall St notoriety” explains what these buggers are.

The latest source of concern is variable interest entities (VIEs), another three-letter acronym that now holds toxic properties. This follows the failure of municipal auctions, known as auction rate securities (ARS) in recent weeks, while collateralised debt obligations and (CDOs) collateralised loan obligations (CLOs) continue to loom over the balance sheets of banks and investors.

VIE is an accounting term that covers a multitude of activities in almost any kind of special purpose vehicle—from conduits and structured investment vehicles (SIVs) to individual CDOs themselves. The term VIE refers to the way in which a bank’s economic exposure to a vehicle can change, which is key to whether it can be kept off-balance sheet.

We’d also like to point out this Bloomberg story on VIE’s, which appeared on Tuesday.

We really like this quote:

“The disclosure on VIEs is hopeless,” Azarchs said. “You have no idea of the structure or how that structure works. Until you know that you don’t know anything. It’s like every day you come into the office and another alphabet soup has run off the rails.”

Uh-oh. It’s definitely no good when the alphabet soup runs off the rails.

A follow-up debit to McClatchy Company for releasing its earnings before they were ready. We wrote about this a couple of weeks ago when McClatchy issued a “preliminary” earnings statement that showed a profit but didn’t include what it knew would be a massive writedown.

Now that the company has its accounting done and that “preliminary” $30 million profit turned into a $1.43 billion loss for the quarter.

A debit to the WSJ for a misleading page-one story on Thursday.

The headline says “Ahoy, Billionaires: The Royal Navy Is at Your Service Skippers of the Rich Get U.K. Training; A Baffling Fire Drill.”

But something’s amiss. It turns out that Steve Mackay, the retired Royal Navy commander who runs a program where skippers and stewards work on yachts, is a contractor.

Suggesting as the headline does that it’s the British Royal Navy training skippers on pleasure craft is plain misleading.

Finally, something dropped into our inbox this week that we think is juvenile-but-funny and actually helpful in understanding the mortgage crisis. (It’s part of a larger
package.)


We don’t know from whence it came, but a credit to Whoever You Are wherever you are.

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Anna Bahney is a Fellow and staff writer for The Audit