This is the so-called “financial trilemma” of Schoenmaker (2011),6 which states that policy-makers can only choose two out of the following three objectives: financial stability, financial integration and national financial policies, such as bank supervision and resolution. One of these has to give way. National financial policies fail to recognise the externality generated by cross-border banks in difficulty.
In the area of lease accounting issues, most companies simply failed to apply longstanding accounting standards related to revenue recognition reserves, accruals and contingencies, and equity accounting. Most companies believed they were actually reporting correctly prior to the restatements.