Faith Based Accounting

“Mark to Market” accounting means that you show assets on your balance sheet at their market value.  Although the SEC and FASB (an organization that writes accounting rules) are resisting, the bright lights in Washingon are working to have the mark-to-market rule suspended:

Congressmen, banking lobbyists and companies including American International Group Inc. have urged the SEC to suspend fair-value accounting, saying it forces firms to report losses they never expect to incur. Federal Reserve Chairman Ben S. Bernanke and other proponents say removing the rule would erode confidence that firms are owning up to losses.

If we close our eyes, think real hard, and click our heels together three times, the toxic waste on our balance sheets will magically turn into ponies, and everybody gets one!

Representative Todd Tiahrt, a Kansas Republican, said the House probably would have approved a $700 billion bailout of financial companies yesterday had the legislation included a suspension of fair-value accounting. The House rejected the measure 228-205.

It would have passed “easily” if the rules had been suspended, Tiahrt, who opposed the legislation, said today in a Bloomberg Television interview.

But if nobody wants to buy your piece of the Shitpile, is it worth anything?

Fair-value rules require companies to determine how much assets are worth based on what they could expect to sell them for on the open market.

“Suspending the mark-to-market prices is the most irresponsible thing to do,” said Diane Garnick, who helps oversee more than $500 billion as an investment strategist at Invesco Ltd. in New York. “Accounting does not make corporate earnings or balance sheets more volatile. Accounting just increases the transparency of volatility in earnings.”

NAH NAH NAH NAH I CAN’T HEEAARRRR YOOUUU!!!:

Anne Canfield, executive vice president of the Consumer Mortgage Coalition, counters that businesses have been forced to “mark down their assets to unrealistic fire-sale prices,” because trading has dried up. Canfield, whose group represents mortgage lenders, urged the SEC to suspend fair-value rules “immediately” in a Sept. 29 letter to the agency.

Ignoring problems always makes them go away – just ask Lehman Brothers.

Norwalk, Connecticut-based FASB, which writes U.S. accounting rules, is preparing “additional interpretive guidance on fair-value measurements” to be released this week, the SEC said. FASB will discuss fair-value accounting at its board meeting tomorrow.

The American Bankers Association, a trade group representing lenders that has lobbied the SEC over fair-value accounting, praised the agency’s clarifications, saying they will “help auditors more accurately price assets,” according to a statement released today.

I have this watch, and I’ve valued it at $10 million, but for you, only $9.8 – today only.  Act now or I’ll put it on ebay, bitchez.

SEC, TASB Resist Calls to Suspend Fair-Value Rules [Bloomberg]
41 Comments

Say, didn’t suspending those very accounting rules ruin many a company but especially one called, er, Unron, Inron, Enran or something like that?

Rully, whats the difference? An asset’s value is theoretical unless and until you sell it. Booking an asset at aquisition cost, well, if its appreciating, you undervalue it, if its going down, you overvalue it, with investment assets, in a rising market the overall effect is to be conservative, you will tend to undervalue, though in a falling market you will overstate value. Mark to market is kinda like counting chickens before they are hatched, its like fretting over losses this week in your 401-K, paper losses in a long term investment. You can argue against mark to market, for example, in any long-term investment, as opposed to in a short-term speculation situation. These mortgage portfolios, for example, right now, would have considerable value to someone who intends to hold them long term, but are worthless to someone who just speculates and intends to dump them ASAP.

They wanted to crucify Christie Whitman here in Joisey for using mark to market accounting on the state employee pension funds, because it allowed her to decrease contributions.

Accounting is an art, not a science.

@ManchuCandidate: more like “ignoring” …
@Prommie: lots of sophisticated models out there, some of which actually work. Buffett’s Gen Re was very good at such valuations before he (wisely) got out of the swap and MBS business and similar. Valuation is possible, but everyone’s afraid to look. But if my money is being used, I want to know.

Here is something too good to be true, I cannot decide if its parody or real: http://www.youtube.com/watch?v=eWwNC2WIH6I

(1) The “Consumer Mortgage Coalition.” God damn. Any business lobby that dresses itself up with a name like that should have their shotcallers put into stocks and pelted with rotten fruit and week-old meat products. Just like in olden times.

(2) Harry Reid: Worst Democratic Leader Ever? You be the judge:

The Senate hopes to revive Treasury’s $700 billion financial rescue plan Wednesday night by packaging it together with more than $100 billion in popular tax breaks as well as aid to rural schools important to House Republicans.

Instead of giving bitchy House GOPers the finger and bitchslapping them about pissing and moaning about how mean Nancy Pelosi was to them, he is fucking rewarding them. I mean, do you think Jim Webb, or Russ Feingold, would have placated the House GOP, or put a size 14 in their ass? Jesus, Harry — grow a fucking pair.

(NB: I had to strain to come up with those guys, and it may be a stretch. My brain came up with Chuck Schumer as a take-no-bull guy, but two seconds later that idea was beaten senseless by the realization that he would have folded like a lawn chair as well. Dianne Feinstein: same story.)

ADD: Get this: if you vote against this, you vote to raise taxes. This one is aimed straight at vulnerable House Democrats who want to keep the markets afloat for a few more months. Either you vote for the bailout that your constituents hate, or we run an ad against you saying that you want to raise taxes. Harry Reid: you just got played.)

ADD #2: Any accounting system that Wall Street likes right now should be pilloried. “Wall Street wants this accounting system. Do you trust Wall Street?” The end.

@Prommie: YouTube blocked at my current jobsite … damn.

@Prommie: Awesome link, Mr. Prom. Btw, the Hook and Bullet press (Field and Stream, Peterson’s Hunting, Shooting Times or Rifle Shooter, I forget which, to name those that have filled my mailbox in the past couple of weeks) are running their presidential interviews right now but only with one candidate. They are all claiming “scheduling problems” as regards getting an interview with Tha Eagle. Peterson’s Hunting did point out that that McCain favors the “drill me, baby” position despite its proven detrimental effect on habitat and waterways.

I think Eagle knows that the Second Amendment absolutists won’t vote for him at all, but that he’ll get the “conservation-minded” voters who care about habitat, and wider environmental, energy and economic issues. I won’t say that rednecks won’t vote for Obama because my mother in law got a former long haul trucker and McCain/guns guy who lives down the dirt county road from her place to go for Obama on economic issues. (That’s the guy who lets me hunt on his land and I’ve helped him find a good gunsmith, cleaned up and old shotgun for him and will be sighting in a .30-30 lever action deer rifle for him when he gets some new sights installed as part of my missionary work as a gun owning liberal Democrat.)

Prom, I’ve asked you not to link to videos of my mother. Are we going to have to have that talk again? Seriously.

According to the “Mark-to-Pipe-Dream” accounting standard (I just made it up, but you can use it too!), my house is worth twice what I paid for it in 2005. I can haz home equity loan now?

@redmanlaw: McCain is apparently giving the gay DC newspaper, the Washington Blade, an interview. I really can’t wait to see how Maverick McWALNUTS! tries to suck up (hehehehe) to gay Repubs.

@Pedonator: My undergrad degree is in accounting. I’m not up on the latest AICPA and FASB pronouncements, but I’ll tell you one thing – when we (the lawyers) dig into the detritus that comes with the inevitable lawsuit, some of the assumptions are pretty amazing.

THREADJACK/////// Guess who just got a ticket to the Cubs game tonight? WOO HOO!!!!!!!!!!

homofascist: Homo! WOO! Fascist! WOO! Homo! WOO! Fascist! WOO!

[/ronnie woo-woo reference]

@homofascist: Quick, make up a “The Other Team Stinques” t-shirt and get some screen time for us!!

@rptrcub:

Man, you know it’s hard times on the right when their candidate has to go trolling teh gayz for votes….

@ManchuCandidate: Enron essentially did an end-run of Mark-to-Market by using all manner of fiction producing calculations to value their contracts every quarter. One of Skilling’s main interests was in getting all those rules reinterpreted so that Enron didn’t have to game valuations so aggressively with these special purpose entities that Fastow had to organize to pull the debt off the balance sheet and ginny up their earnings.

@blogenfreude: Right, and what is amazing is that no one in the fucking room stands up and say, guys, this is fiction and even thinking about it is criminal. In another life, I’ve had to look inside of underwriting nonfeasance/malfeasance and bank fraud and it’s always been a source of horrific disappointment the sheer number of people who will look the other way at a transaction that is in one dimension or another (or many) simply criminal.

Its only criminal if they don’t pay, if they default. Noone ever looks closely at a performing account, its only when they go bad that anyone looks for why.

Its only as corrupt as anything, no more, no less.

@Tommmcatt Yet Again: It’s been hard times on the right for years now. Thus their incessant mens’ room GOTV campaigns, Tap the Vote and such.

@Prommie: Eventually, it all comes home to roost, and if someone is, say, inventing non-existing UCCs to support equipment loan applications, it is kinda illegal on its face, not corrupt.

@Tommmcatt Yet Again: And in good fashion, he ties in 9/11 with the gays: Mark Bingham, one of the Flight 93 passengers.

@rptrcub: Why didn’t they ask him why he scrubbed the Alabama AG off of McCain’s campaign website after his wife discovered him gobbling schlong?

@FlyingChainSaw: What, so now it’s some kind of crime to have another man’s penis so far down your throat he can tell if you’ve had a tonsilectomy?

@IanJ: McCain apparently thinks to. As soon as the Alabama AG’s wife found him gobbling schlong the McCain campaing tore all reference to him – he was the state chair of the McCain Campaign – off of the website. We recovered it through the magic of the Internet Archive months ago when the news broke.

@Tommmcatt Yet Again: It really pisses me off that Bingham supported McCain when he truly was mavericky (TM), and brings up his memory now when the Geez is sucking the fundies’ collective dick.

@IanJ: It’s only a crime if you don’t admit to it. Or if you vote against your own interests but engage in knobgobbling.

Hey guys, Talibunny has a gay friend, although that behavior is a choice (psst, Larry Flynt? get your minions to work finding the lesbo pic from college days). Still, she’s not admitting that she believes y’all are going str8 to hell.

As for homosexuality, I am not going to judge Americans and the decisions that they make in their adult personal relationships. I have one of my absolute best friends for the last 30 years happens to be gay, and I love her dearly. And she is not my “gay friend,” she is one of my best friends, who happens to have made a choice that isn’t a choice that I have made. But I am not going to judge people.

And yes, it’s from her chats with Katie, a/k/a the greatest comedy goldmine of the 21st century.

@rptrcub: He thought he was being invited to a Zorro movie.

ADD: @ cynica – that toaster oven premium really brought ’em in by the droves during one of lesbianism’s most successful promotions.

@Mistress Cynica: CBS shows sly genius to keep dribbling out unaired pieces of the Katie interview….I just hope they’ve got some kind of pre-debate money-shot lined up for tomorrow.

And how long before some blogger or reporter tracks down this lesbian friend and asks her if she’s satisfied with the “choice” she made? And hmmm…one of her best friends for 30 years…any chance Sarah “experimented” in college before making her “choice” to be straight?

@Pedonator: You have just launched a fantasy for millions of Red State/Freepers in their moms’ basements to fwap their 3 cm wangs to.

@rptrcub: Yeah, guess that one should have gone to the Casting Couch thread…

http://www.huffingtonpost.com/2008/10/01/sarah-palins-beauty-pagea_n_130901.html

Jeepers, the band practically downs her completely out. They sort of let up during the four bars of the melody

One trombone entrance was hilarious

Her pitch concept was better than the brass section”s anyway

Poor Sully’s kinda livid over the whole gay-friend thing (and lots of other things).

@rptrcub:
I might have been interested before the campaign, but anything about Sarah and sex leaves me as cold as Juneau in January.

ETA: How could you tell who’s the lesbian? They all wear flannel and can shoot guns… (sorry, bad joke and low hanging fruit etc)

Many Red Staters probably would be more interested in /slash fanfic about Biden and Obama.

@IanJ: Sully’s been a hoot and a holler the past few weeks. Soylent Green is people!

This guy Sullivan is a complete fucking twit. Went on Maher’s show to announce that people taking out mortgages they could not afford are the cause of global financial catastrophe as if underwriting were non-existent or not worth discussing as a relevant aspect of the crisis at hand and that anyone is just supposed to be able to drive away with any amount of cash they want. They should have thrown him into the audience to suffer the death of a 1000 gnoogies.

@IanJ: It might be due to the fact that he’ll be forced to leave US-America if McGeezer/Talibunny are elected due to the HIV ban, and that Britain won’t show him lurve.

@rptrcub: I didn’t hear about this. Why would poor little war-mongering Sully have to leave? Are they kicking out all the HIV-infected folks, or is he going to pick self-exile over living with a Geez/Talibunny ticket?

I have to admit, his past performance on Iraq has not endeared me to Sully, but his willingness to rail against the ‘bunny has made some of his stuff interesting to read.

@IanJ: Actually, I think Sully is a US citizen. But maybe I confuse him with that other Blowhard Brit Media Whore Who Should Know Better, C. Hitchens. Anyway, under current law I don’t think they deport furriners for HIV, they just try not to let them in in the first place.

@FlyingChainSaw: That was a great Real Time — Sully vs. Naomi Klein. Could only have been better with oil and a cage.

Today’s Sully Winner:

“I’m sorry but I’m not going to fall for another W.”

Because the first one was so persuasive, y’know?

“This cheetoh-stained pecker, for one, will not be fooled again!”

EDIT: I have no fucking clue what that means. But it was sitting there, all queued up in my forebrain in response to this thread. Paging Dr. Freud!

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