Mr Cooper Group Inc (COOP)

[CBA09]

Ref: Isn't the dramatic change in retained earnings indicative of the transferral of MBS Trusts and WMI's corresponding participatory cash flow into bankruptcy remote safe harbor accounts triggered by the change of ownership event???

Comment:
Reduction ( dramatic change ) to Retained Earnings would not be related to outflow of cash to bankruptcy remote safe harbor assets.

Changes to Retained Earnings are mostly due to the following:

1) + adds to Retained Earnings - when Income exceeds Expenses from Profit & Loss Statement.


2) - reduction to Retained Earnings - when Expenses exceeds Income from Profit & Loss Statement.

3) - reduction to Retained Earnings - when Dividends paid.

4) - Prior period error ( + or - ) to Retained Earnings ( would result in adjustment to previous stated Retained Earnings which did not account for the error ).

5) - Change in accounting principle ( + or - ) would result in restating Retained Earnings as if the change happened retroactively.


Retained Earnings is a nothing more than a collective result of past transactions that would be reflected on the Profit & Loss Statement. WMI investment in WMB was abandoned as worthless so the entry would be as follows:

- Investment in WMB - Credit ( Asset - Balance Sheet )

- Loss on Investment in WMB - Debit ( Expense - Profit & Loss Statement )

The Loss ( Expense ) from the Profit & Loss Statement would transfer to Retained Earnings as a reduction.

Do not be overly concerned with Retained Earnings. While having a positive Retained Earnings is a sign of profitability transferred from the Profit & Loss Statement, Parent Companies generally use up ( reduce ) Retained Earnings via Dividends or Investments.

For us escrow holders - Important assets are those in Safe Harbor.