Under New FASB Accounting Rule, Toxic Assets May Be Revalued By Banks

April 3, 2009 by · Leave a Comment
Filed under: Legal News 

Well this is were we have come.  Instead of letting the market determine the price of assets on their books, we instead changed the accounting rules so they can set the price for them and then ultimately sell them off and higher than actual value.   This move was a bad one and will backfire on the regulators face.   All this tells me, is the banks are in a much worsen condition and they had to play an accounting trick in order to no be insolvent.  This does not bring confidence back to the market or fool any of the smart money out there. Good job.

News (Washington Post):

The board that sets U.S. accounting rules voted yesterday to let financial firms report higher values for some troubled assets, a controversial step likely to increase some banks’ reported earnings but also heighten suspicions that the companies are concealing problems.

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FASB to discuss mark-to-market accounting rule changes on Monday

March 14, 2009 by · Leave a Comment
Filed under: Policy News 

One thing is for sure, even if they do change the mark-to-market accounting which is a bad idea if you are trying to restore confidence.   We will discover the value of those assets period.  You may ask, “what are the value of those bad assets”.

If we have to result to changing rules to keep our banks solvent, then the assets value must be much closer to 0% value compared their current book value that is 100% value.  If there is no market for those assets then I would say at this point they are worthless.  But in my opinion what they are really trying to do is make a way for all these banks to not have to declare losses on all those derivatives they are holding.

News:

The Financial Accounting Standards Board, which sets U.S. accounting rules, will discuss mark-to-market accounting guidance at its board meeting on Monday, according to its website.

The board says it will discuss “additional application guidance” that would clarify how mark to market is used in illiquid markets, according to the website.

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