April 2, 2009

FLASH: And then, as predicted here, they relaxed mark-to-market rules in order to save the banks (for now)

Next comes the restoration of the uptick rule, followed by new higher limits on 401k contributions.

Invest wisely.

FASB gives firms more leeway in valuing assets - accounting board gives companies more leeway in valuing assets, starts in current quarter

WASHINGTON (AP) -- The board that sets U.S. accounting standards is giving companies more leeway when valuing assets, providing a potential boost to battered banks' balance sheets.

The independent Financial Accounting Standards Board voted to adopt new guidelines under the so-called mark-to-market accounting rules, which require companies to value assets at prices reflecting current market conditions.

The changes will allow the assets to be valued at what they would go for in an "orderly" sale, as opposed to a forced or distressed sale. The new guidelines will apply to the second quarter that began this month.

The mark-to-market rules have forced banks to take steep write-downs on some assets, especially securities tied to high-risk subprime mortgages.

30 comments:

Anonymous said...

OooooBaaaamy!

Gimme Cheese.

Anonymous said...

ok. they mark them to model. now what? they are still toxic and nobody wants them. what difference does it make?

Anonymous said...

cramer just annonced that the depression is over. congrats to everyone in our government for saving us. thanks go out to the obama administration for helping us out of this tight spot. we appreciate all of your help keith in our time of need. thanks to all of you for helping out. it is over folks. now it is time for us to go back to consuming and being the amerika that we all have grown to know and love .

not


got gold......?????

I can't believe this idiot cramer. such a big liar.

Anonymous said...

"...The changes will allow the assets to be valued at what they would go for in an "orderly" sale, as opposed to a forced or distressed sale..."

HORSESHIT. It's just more of the supremely dishonest shit we've seen over and over and over.

By the same principle, will we see markdowns when times are good because values at those times also do not reflect reality?

Anonymous said...

"Welcome to Fantasy Island"

You´ve gotta be kiddin right? You can´t hide an elephant under the rug...
Al least I can value my DVD collection at 200 billion dollars...

Anonymous said...

This strikes of fraud and pillage!!! Damn the bastards...

Anonymous said...

Total BS

Stuck in So Pa said...

So now we go to "Mark to Myth! Whatever value I want my asset to be, that's what it magically is! Nobody wants or can afford them, so what does it matter. At least the idiots can feel good that their POS is now worth $800,000 AGAIN!

Get that "For Sale" sign out on the lawn again Martha!

Side note:

The guy across the street finally sold last month. Bought for $100-110, put $25-40 into it, sold for $189. Buyers are young (late 20's early 30’s) couple from Balt/DC area, as usual. I asked new neighbor how the place was, he said it "needs work," but at least the taxes are cheap compared to Maryland. Poor dumb SOB doesn't know that the only tax that was prorated at settlement was the county property tax (gone up 400% in three years), since the "teacher's union dues" tax, the real killer, doesn't come out till midyear and due at the end of August. Somebody else that didn’t do his homework! With an $189,000 price tag on the POS,is he EVER in for one hell of a shock when he gets that second tax bill. I would love to be that fly on the wall when he opens that envelope!

casey said...

do any of you beleive the numbers anyway?Banks are insolvent folks.

Anonymous said...

My trust level went down again. When the small guy is in trouble do they change the rules?

Amtex said...

This blog has made me lots of money but you doomers are missing the boat. I sold the market at 13750. Bought gold at $400, sold at $980. Sold 2 Florida houses in 2006.

I got back in the market in energy stocks a month ago and have done well.

Honestly, stop the gold nonsense. Gold is talked about at every party, every water cooler, it is not going anywhere. Energy stocks are good long term investments.

I love this blog, but you doomers that didn't get back on board a month ago are going to miss out on a nice run up.

Disaster is not coming to America, mass riots are not coming to America, and gold is not going to $3000.

The entire purpose of knowing to get out of the market 6 months ago and let others take the 55% fall is to get back in once a floor is put under the market.

Sure inflation may be coming....oil, not gold, sure the dirty trick players got rewarded....but so are smart Soot and Ashes readers who got back in the market at 6500-7000.

It makes no sense to miss out on inflated rallies while waiting for the sky to fall. We were right....now go make some money off of being right.

Anonymous said...

The bubble has bursted, remember?
Whether it's an orderly sale or a distressed or forced sale, the value is now the same.

thinker said...

Do you want riots and burning banks?


I can tell you are Christians
by your love
by your love

la la la la

vanilla ice said...

And look at that stock rally continue. The higher they climb the harder they fall. Dow to 6000

RobertM said...

I don't know if you guys caught this article. It's semi-related and explains why they are doing what they are doing. Hint- the banks are insolvent.

Angry Leprechaun said...

How much duct tape does it take to fix a broken carburetor?

Anonymous said...

if they restore the uptick rule for shorting they ought to create a down tick rule for buying.

only fair.

Anonymous said...

higher limits on 401k contributions??


that will be the day.

I expect them to enable people to withdraw money penalty free (perhaps even tax incentives) so they can buy houses, hummers, and HD TVs

Anonymous said...

An elephant with a cute lovable mouse (with big ears) on his back were walking down the road after a while the mouse laughed really loud. Why are you laughing, the elephant asked, never mind said the mouse.
This scene happened again four time in a row after which the big powerful elephant stopped and demanded an explanation.
Well, said the lovable cute mouse with big ears, I screwed you five times and you didn’t even notice it.

Tony said...

Amtex said:
“Sure inflation may be coming....oil, not gold, sure the dirty trick players got rewarded....but so are smart Soot and Ashes readers who got back in the market at 6500-7000.”

You are correct, however I disagree on your take on oil..

It is clear that an irreversible trend began when gas reached the $4.00 range, and that is the consistent reduction in demand for fossil fuel.

Demand for fossil fuel will never get any higher then it is today, and will continue declining.

Anonymous said...

so, with the mark to market rule relaxed, can banks mark values back up and create some temporary profits?

Anonymous said...

"Demand for fossil fuel will never get any higher then it is today, and will continue declining."

Ha Ha Ha !

The global car boom has JUST begun. Wait 'till hundreds of millions of Indians and Chinese start buying cars.

Fool - PRODUCTION will never get any higher than it is today, and will continue declining - not consumption!

Buy - DXO, DBA, USL, USO. (In England buy CRUD)

Mitesh Damania said...

I got some monopoly money I need to unload at 100% value.

vanilla ice said...

"Demand for fossil fuel will never get any higher then it is today, and will continue declining."

Because demand mirrors diminishing supplies!

RICO said...

Desperately insolvent grifters throughout the land have been granted a new lease on life.

With a mere nod-of-approval from FASB, fraudulent accounting has been been given a new book-cooking seal of approval.

Of course, auditing and CONsulting fees will have to be drastically increased in order to blindly oversee and graciously overlook this renewed accounting artistry.

Nope, no conflict of interest here...

Anonymous said...

here you go keith. this is taken from the tickerforum, rumor section. the good old taxpayer is going to pay for the difference between what the auction price is on this junk, vs what the asset is listed at , on the balance sheets of these big banks.

so much for all this talk about relaxing the mark to market rules. i knew who was going to get the hose on this deal and as usual it is always the good old taxpayer. oh how long will we put up with this crap? what is it going to take before the people of this country get up off of their fat asses and help to do something about this? how long?





Stx_jay
Posts: 469
Incept: 2008-04-06

St Croix, USVI
Report This As A Bad Post Add To Your Ignored User List I'm part of team that was considering going after the Legacy Loans program (residential mortgages). After hearing from one of my partner's senior FDIC contact, I'm about 99.9% sure we won't play.

Here's what the FDIC is thinking now:

1) Commercial and construction loans will be first in the auction process. The recent Goldman analysis that was floating around here indicated that many large banks haven't even begun to mark these assets down. Literally. Lots of them are reporting their assets in these categories as worth par or very close to it.

2) Virtually all of the selling will be from the big banks... more than their respective market share would indicate.

3) Hope you're sitting down for this one: TARP funds will be used to replace any writedowns that will arise from the difference between current marks and the auction price.

So it is official (or soon shall be): the taxpayer will be the bagholder for all toxic assets on the major banks' balance sheets. The notion that destroyed capital (via credit writedowns) can be replaced by borrowed money (TARP funds) also means that the largest banks will be much more levered than before this whole sorry process began.

Imagine the following auction scenario. A pool was marked at $.98, it sells for $.50 at auction. TARP funds $.48 of the unpaid principal balance to make up the capital hit. The private buyer puts up 1/12th of the auction price (FDIC 6:1 leverage, Treasury 50% of capital). So in other words, the private buyer has put up about 2% of the UPB and the bank took a previously disclosed 2% writeoff. Ultimately in this scenario, the taxpayer is taking on something like 96% of the risk.

This is a direct transfer of wealth from the taxpayer to the folks holding on to the lower parts of the capital structure in major banks. It will make the AIG stealth bailout/scam look like a freakin' parking violation.

Anonymous said...

This latest FASB 'ruling' can only be interpreted as a lagging indicator of our impending national bankruptcy.

Paul E. Math said...

Amtex, I feel sorry for people who think they need to lie about themselves to get any respect from others.

Not from everyone, but, for the most part, your honest thoughts and opinions will be respected.

If anything, you've given me a reason to take actions opposite to your recommendations.

Anonymous said...

amtex = dopes?

Martin said...

Amtex,

you are correct that the way to make money is to be right about the time to get out and then be right about the time to get back in. How did you know this was the time to get back in? All the things that told us it was time to get out (Enron style accounting gimmicks, housing overpriced and leveraged to the hilt, the finance industry depending on poor people to pay back loans, etc) are still in place. The things that told us to get out are still telling us to get out. What criteria did you use to know it was time to get back in? And is it a short term or long term position? What will tell you you need to get back out again?