Alarming news that banks and securities firms are hiding $35 billion of writedowns. Instead of putting this stuff on their income statements, where it will hit the bottom line, they are leaving it on their balance sheets. The list includes Citigroup, ING and Merrill Lynch.

What that means is that we don't really know how much crap is on their books.

Now of course, this is all perfectly legal under accounting rules which allow companies to make a distinction between material that can be traded, and which would go on the income statement, and so-called long term investments which are held to maturity and put on the balance sheet.

But you can bet your bottom dollar that some of the banks out there would be reclassifying their financial instruments, and turning them into long term investments so that they don't have to have any impact on the bottom line.

That is why the International Accounting Standards Board has a discussion paper out now seeking to change the rules and reduce the categories of financial instruments. In effect, that would leave the banks with less wriggle room.

The banks have until September 19 to respond to the discussion paper. You can almost hear them screaming now.