KPMG enabled OC lender

Or so says a report commissioned by the Justice Department about how the accounting firm condoned "improper and imprudent practices" by the once high-flying New Century Financial. KPMG is said to have endorsed a move by the mortgage lender to change its accounting practices so that it could report a profit rather than a loss. From the NYT:

The profit was important because it allowed executives to earn bonuses and convince Wall Street that it was in fine shape financially when in fact its business was coming apart, the report contended. But the report stopped short of saying that the company “engaged in earnings management or manipulation, although its accounting irregularities almost always resulted in increased earnings.”

The company admitted that its accounting was wrong in early 2007 and sought bankruptcy protection less than two months later. It was the first of the big mortgage companies to fail and helped set in motion the subprime meltdown. The report was prepared by former SEC investigator Michael Missal, who was hired by the United States Trustee overseeing the New Century bankruptcy.