Shock, surprise. Google the news feeds. They are changing fast. Here's the deal. The FASB rule 157 required more stringent mark to market valuation of illiquid investments. The kicker? 157 was voluntary. A voluntary regulatory guideline was withdrawn because it would cause market chaos. A bunch of criminals with trillions under management are taking the 5th rather than come clean.
11 comments:
First, what's new here.
Second, you can pick on Fresno.
http://www.autobloggreen.com/2007/11/11/video-toyota-apologizes-for-prius-ad-after-it-appears-on-digg/
Rob, call back the monsters, the delay may only be in non-financial assets and liabilities, as they're hashing out on CR right now. And I'm sure that as much as the investment banks would like to consider non-performing loans to be "non-financial", there are fairly strict rules on what qualifies under that term in accounting.
That does not, however, rule out the possibility of the FASB giving in under extremely intense pressure overnight, and giving the market a "pleasant surprise" in the morning. But I would rather suspect that this small concession is the FASB telling the markets that this is as far as they'll go, and no, they aren't going to push back or repeal FASB 157 for financial assets and liabilities.
Bear min mind, the FASB is primarily drawn from the accounting industry, and is not government controlled. Given the problems in the financial sector, the accounting industry may be putting pressure of its own on the FASB to shift the burden back to the financial companies. Accountants do not, repeat do not want to be in the hot seat again like they were in 2001-2002. The FASB may be protecting the accounting sector, to the detriment of the financials--but that may work to the benefit of the investors.
Investors may not see it that way when they see the level 3 numbers, but you know what I mean.
PV,
You have likely forgotten more than I will ever know. That said I think you are missing a bigger issue. Confidence in the US financial markets is eroding. Not some wild shot from outside but small bits from every direction. FASB 157 was a long time a birthing. Any delay is only because more honest accounting would cause market disruption. We need to avoid Japan 1990 at any cost. All I see is anything except Japan 1990 at any cost.
157 was a disaster waiting to happen. If you adopted it management picked assets they wanted to mark to market and assets they wanted to retain at book (when adopted that included looking backward). FAS 133 needs to be fixed, but the solution was worse than the disease in this case.
...A bunch of criminals with trillions under management are taking the 5th rather than come clean.
I am shocked, shocked, that the criminal class won't come clean. Really.
OT but
http://finance.yahoo.com/real-estate/article/103872/Real-Estate:-Buy,-Sell,-or-Hold;_ylt=AnA3aCIxK4nrgmNp.6fWFJq7YWsA
discusses the value of a house in certain markets in 5 years. seems about right. I'm sure some naive folks out there will read this article and say 'no way. My house can't go down that much!'.
on topic...I haven't done much with accounting since college. I was going to be an accountant...for 3 semesters in college I went down that path...but alas I found it boring. shock.
Since it looks like the deadline of FASB 157 is still on for today, I've prepared the valuations of my level 3 assets and liabilities. I'll be supplying a complete list to my shareholders, but I've listed some highlights below.
Assets
Six (6) "World of Warcraft" characters, levels 14-60
Book Value: $0
Market Value: $50
Compact Disc, entitled "The Very Best of Wang Chung"
Book Value: $15
Market Value: $2
Complete Vintage Copy of "Master of Magic" Computer Game
Book Value: $30
Market Value: $100 (not for sale!)
Used Mapbook of The Greater Washington Area
Book Value: $25
Market Value: $1
Alden Shell Cordovan Shoes
Book Value: $550
Market Value: $200
Liabilities
Holiday Shopping Season
Estimated Liability: $500
Vague Promise to Former Co-worker of "We Should Get Together Some Time for Lunch"
Estimated Liability: $15
I thought y'all was rich out there. Whaazzup??
Don't feel bad, Florida is in the same boat. Get it? Boat? Bwahaha!!
Edger -
What do you expect, the states budgeted based on estimated taxes. Housing prices / economy did not hold up their end of the bargin.
CA and FL are both taking it in the shorts on property taxes. I'd expect Utah to be in the same boat, perhaps they were more reasonable in their estimates.
Hi P.F.,
You'll excuse my bitterness. I have watched for years as those brain-dead maggots bankrupted this country with "it only goes up", having a grand old party while the middle of the country languished. I will enjoy watching the travails of all those smug dumb-assess in the coming years. They had the party, we pay for it. I hope they rot.
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