Talk:Off-balance-sheet

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Finance & Investment Mid‑importance

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Comments

article states "If the customer chooses to transfer the deposit to a money market mutual fund account sponsored by the same bank, the $1 million would not be a liability of the bank, but an amount held in trust for the client (formally as shares or units in a form of collective fund). If the funds are used to purchase stock, the stock is similarly not owned by the bank, and do not appear as an asset or liability of the bank. If the client subsequently sells the stock and deposits the proceeds in a regular bank account, these would now again appear as a liability of the bank (although the same funds held in a brokerage account may or may not be off-balance sheet). However, it's been argued that the contrary is also feasible."

this paragraph is suggesting that a purchase of a money-market mutual fund is NOT a purchase of stock. in the u.s. at least, most (if not all?) money-market mutual funds are open-end mutual funds organized under the Investment Company Act of 1940 and an investor's ownership is evidenced by shares (or units) of stock issued by the investment company (i.e., money-market mutual fund).

paragraph needs to be recast.

also, there should be distinctive mention made between a bank's customer placing funds in (a) a money-market mutual fund (investment company) via the bank (whether or not if sponsored by the bank or merely on the bank's menu of money-market mutual funds) or (b) a money-market deposit account (which is not an investment company but, rather, is more akin to an interest-bearing savings account) and remains a liability of the bank.--68.173.2.68 (talk) 09:55, 1 October 2008 (UTC)[reply]

Off balance sheet versus segregated accounts

"... financial institutions often offer asset management or brokerage services to their clients. The assets in question (often securities) usually belong to the individual clients directly or in trust, while the company may provide management, depository or other services to the client. The company itself has no direct claim to the assets, and usually has some basic fiduciary duties with respect to the client."

It seems to me that this is a definition of a segregated account NOT of an off balance sheet entity. The financial institution has no risk (other than covering operating expenses) in, say, a mutual fund. In the case of off-balance sheet entities (e.g. hedge funds launched by an investment bank such as the ones that brought down Bear Stearns) the institution retains some of the financial risk.

http://www.investopedia.com/terms/o/off-balance-sheet-obs.asp

http://www.investopedia.com/terms/o/obsf.asp

Also see the article referenced in footnote 2 (there is no no.1): http://www.investopedia.com/articles/analyst/022002.asp Gatorinvancouver (talk) 17:13, 23 June 2010 (UTC)[reply]

Criticism

I'm surprised there isn't a criticism section. Not necessarily that off-balance-sheet items shouldn't be used, but just noting their potential for abuse. For example, Enron. Jgold03 (talk) 17:02, 7 September 2010 (UTC)[reply]

Grammar question

Just came across this phrase in my work as a translator. Is it off-balance-sheet items or off-balance sheet items? Thank you Hhgygy (talk) 10:51, 22 April 2022 (UTC)[reply]