Commentaries and insightful analyses on the world of finance, technology and IT.

« Using Your Mobile To Get Mobile | Main | XBRL Opportunity »

Mark-to-Market Rules - Worsening the Credit Crisis?

With Citi being forced to seek the help of the U.S. government once again, it is apparent that banks will continue to feel the effects of a deteriorating housing market for some time to come.  While the viability of Citi’s Universal Banking model is being debated, it is becoming increasingly clear that, regardless of Bank-type, mortgage-backed securities are drowning our financial institutions in a sea of red ink. 

Many question whether this deluge of losses is actually necessary.  Bankers are pressuring regulators and lawmakers to make adjustments to FAS 157, the mark-to-market accounting rule in the US.  Put in place in response to the Enron crisis (Enron overvalued its assets to the point of bankruptcy) mark-to-market accounting requires corporations to value asset at their "fair value"; the price the asset would command on the open market. 

Read more on the Think Flat site...

Posted by Balaji Yellavalli on November 30, 2008 01:47 PM |

TrackBack

TrackBack URL for this entry:
http://www.infosysblogs.com/finspeak-mt/mt-tb.fcgi/21

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Please key in the two words you see in the box to validate your identity as an authentic user and reduce spam.