Replies

Financial institutions were the architects and pioneers of these shady accounting practices.

I worked for ten years in the real estate development division of a bankcorp.

What they would do is locate a piece of real estate on which the bank wished to locate a branch. Then they would locate a "promenient" citizen or other corporation to "sell" the developed property to after the building and land development was completed, with a lease-back agreement.

They could "write-off" lease payments, which were only payments from/to themselves to cover the building expenses and a moderate "user fee". The stockholders would never realize any long-term capital liability increase being reported because the payment expenses were claimed under renewable short-term leasehold agreement expenses.

I admit I don't understand the entire workings of the "system", but it became a common term to use "sell-lease back" to describe these transactions. So, no one should be surprised to find a LOT of involvement by the financial institutions...