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The G 20 riots are usually over the demand that the industrialized countries forgive their loans to emerging and third world countries. Hey, if America is forced to eventually default on its loans they may have something there.
It's actually worse than that as the subprime mortgages that were packaged up got rated AAA. True junk bonds sell low but have high interest payments to offset the risk. AAA gets a higher price and lower rate for security.
These in effect were junk bonds rated AAA and not discovered until the underlying mortgages started to default. How does one value that ?
Mark-to-market rules state that the assets are valued at their current market price. Since the market almost entirely seized up and virtually no one was willing to buy them at any price, the assets had to be written down to near-zero. In reality, if the bank were to hold them to maturity, they would get an amount back that significantly exceeds what one would expect based on the market value alone. That is the reason why some members of Congress, the SEC, and the FASB supported a revision of the rules.
Mark-to-market rules state that the assets are valued at their current market price. Since the market almost entirely seized up and virtually no one was willing to buy them at any price, the assets had to be written down to near-zero. In reality, if the bank were to hold them to maturity, they would get an amount back that significantly exceeds what one would expect based on the market value alone. That is the reason why some members of Congress, the SEC, and the FASB supported a revision of the rules.
I agree they should change the rules too. If the banks assets are shown at zero% but they do in fact have value, then they should be able to show value . The old rules didn't make a lot of sense to me.
You know, it won't kill you to actually read the news before posting stuff. I don't really have much expectation when it comes to this
forum as most posters here seem to thoroughly lack some of the most basic training in science&logic. But seriously,
check your source first. No wonder the people you badmouth are publishing on journals and respected newspapers, and you guys are
posting stuff and acting smart on an anonymous forum.
Well the FHLB Chairman has resigned. These new rules pushed by Congress didn't sit well with him.
An accounting rule changed pushed by the Bankers and Congress in favor of lax rules is NOT good.
This is the total opposite of transparency..this now obfuscates the true value of this bad paper.
snippet:
The FASB’s rules on this subject, which have never been well defined, are now in flux. Today, after caving in to pressure by the banking industry and members of Congress, the Financial Accounting Standards Board is set to vote on a plan to relax its rules on mark-to-market accounting, so that companies can disregard market prices and ignore losses on their securities indefinitely.
I agree they should change the rules too. If the banks assets are shown at zero% but they do in fact have value, then they should be able to show value . The old rules didn't make a lot of sense to me.
The value, last I read was $.30 on the $1.00 and no one will buy them..that is up until the Treasury came forward with their plan.
You know, it won't kill you to actually read the news before posting stuff. I don't really have much expectation when it comes to this
forum as most posters here seem to thoroughly lack some of the most basic training in science&logic. But seriously,
check your source first. No wonder the people you badmouth are publishing on journals and respected newspapers, and you guys are
posting stuff and acting smart on an anonymous forum.
It's funny that you say that... because from what I recall, it was a lot of these "respected" newspapers, journalists, experts, etc. that pumped up the bubble, sold these assets, and said it'll last forever since they effectively "eliminated" risk.
Little be known, the guys writing on the "anonymous" boards and sub-forums (contrarians) were talking about the eventual collapse, and how what the experts were preaching was flawed. Of course we all know who was right.
I would suggest instead of trusting the "Brand" and whatever they say, that you trust your own analysis from multiple sources.
I understand what they are trying to do with the new rules... Basically for those assets that have not defaulted... the expected cash flows are still the same so therefore they still have the same values. BUT, the problem is, is that it is STILL a ticking time bomb and the original values ARE based on flawed analysis and therefore should be discounted.
This is not good, and basically they'll sell this "junk" stuff to our silly government at a higher "value". Great for banks.... but once again bad for taxpayers.
-chuck22b
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