No Market for Mark-to-Market …

They really did it … OMG

Mark-to market is not anymore mark-to-market …

So … now everything is possible … enjoy the time until reality comes back …

- FASB’s new guidance allows banks and their auditors to use “significant judgment” when valuing the illiquid assets such as mortgage securities. For example, if companies have assets with strong cash flows that can be estimated, then those cash flows would be used to approximate market value in the illiquid market. This approach could be used when bank auditors determine there is a “significant decline of a market for new issuances,” in other words if there was a primary market and now there is no market.

- Another provision that the FASB board approved would allow companies to put certain illiquid debt assets, such as mortgage securities, they would otherwise have been forced to write down into a category called “other comprehensive income.” As a result, financial institutions’ operating income is improved because they can record a lower amount of loss in their income statements.

- The provision allows banks to make changes to their first-quarter 2009 results, which are expected to be released by mid-April.

- Columbia Business School Accounting Professor Robert Willens said new audit guidance, which would give banks the ability to use internal models and analysis to value their illiquid assets, could hike their earnings on average by 20%. However, he added that large banks such as Citigroup Inc. would get “the lions share” of the revaluation profits because they are stuck with a disproportionately large amount of the illiquid mortgage and other securities.

- However, the battle over mark-to-market may not yet be over. Bankers are pressing lawmakers to urge FASB and its parent regulator, the SEC, to set up a procedure to retroactively recoup losses financial institutions have already taken on impaired illiquid assets.

All in all … I will not even care to read these reports as they could be closer to fairy tales than reality.

Add PPIP … and you know … only technical trading might give you an income … fundamentals are gone

Tags: Banks, financials, mark-to-market, PPIP

This entry was posted on Donnerstag, April 2nd, 2009 at 18:00 and is filed under FDAX. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.