John Petersen

The Latest on Bank Nationalization

I agree that "Too big to fail" is not a position that any corporation should enjoy. There are many followers of mega-trends who believe the immense corporate structures of the past will eventually give way to smaller and nimbler organizations that are better able to adapt to change. It will be a welcome development if they're right. Otherwise, the Government will continue to find itself negotiating with and supporting a different class of terrorists- companies that are too big to fail.

FAS 157 was issued in September 2006 and effective for fiscal years beginning after November 15, 2007. As soon as the rule took effect, the Dow started its decline. As a one time practitioner of the dark arts, I believe FAS 157 is wholly inconsistent with the "going concern principle." If we are going to abandon the basic principals that give periodic financial statements value, why not turn the entire process over to qualified appraisers and be done with it? Seriously, what good is a consistent application of generally accepted accounting principles if the core valuation of assets changes from quarter to quarter?

FAS 157: Let the Tweaking Begin

FAS 157 was issued in September 2006 and effective for fiscal years beginning after November 15, 2007. As soon as the rule took effect, the Dow started its decline. As a one time practitioner of the dark arts, I believe FAS 157 is wholly inconsistent with the "going concern principle." If we are going to abandon the basic principals that give periodic financial statements value, why not turn the entire process over to qualified appraisers and be done with it? Seriously, what good is a consistent application of generally accepted accounting principles if the core valuation of assets changes from quarter to quarter?

The Wonders of Mark-to-Market: Simultaneously Well-Capitalized and Insolvent

The problem with FAS 157 is that it abrogates both the cost principle and the going concern presumption in one fell stroke, and books all assets at the value the weakest market participant is willing to sell for. When I studied accounting, the principles that have been destroyed by FAS 157 were sacred. With FAS 157, it might make more sense to jettison the auditors in their entirety and turn the whole process over to MAI appraisers.

Why Is Everyone Blaming the CEOs? It's the Government's Fault

The problem with looking for somebody to blame is that every time I point a finger at somebody else I have three more pointing back at me. There's been more than enough stupidity to go around and today the important thing is getting up in the morning, going to work and solving our problems. The only thing that will ever get us out of this mess is individuals who take responsibility for their own problems.

Furthering the Discussion on Bank Nationalization

Liz Moyer of Forbes has proposed the perfect name for a bad bank, the Bad Asset Repository Fund or BARF. I've suggested an equally truthful alternative, the Federal Union Bad Asset Repository or FUBAR.

There are times when I wonder whether it wouldn't make more sense to use $350 billion to create 35 fully functional good banks and let the chips fall where they may on the judgment errors of the past.