Thursday, October 29, 2020

Top 5 Scariest Zombie States

This Halloween, Truth In Accounting is resurrecting its “Zombie Index” to identify some scary state governments.

TIA notes that these state governments are in relatively bad financial condition and may also pose higher risks to their citizens and taxpayers from “gamble for resurrection” investment policies, on top of the financial burden they have already accumulated.

Here is the full report (1 minute 8 seconds):

The index is inspired by the work of Edward Kane, a professor of finance at Boston College. Kane wrote books warning about the developing crisis in the bank deposit insurance system in the late 1980s, before and during the savings and loan crisis.

Kane coined the term "zombie bank" to refer to banks and thrifts that were effectively insolvent but allowed to remain open, in part with deceptive accounting.

Kane called these banks "zombies" as they were really dead but allowed to walk among the living. False accounting delayed loss recognition and regulatory intervention.

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