Ronald Pires

What Consequence Will FASB's Expected Approval Have on Mark-to-Market Accounting?

This rule change will end up artificially inflating the value of thinly-traded assets. Their new values will now include a premium for the luxury of being able to play with their booked values when things get rough.

Of course, honest bankers would never do this.

Fair-Value Accounting Instills Exactly the Wrong Mindset in Bankers

Has anyone bothered to notice that fair value accounting will itself distort market pricing by driving banks TOWARDS thinly-traded assets, especially when the system is showing signs of stress? Why would I want to hold price-obvious assets if I thought I was facing a downturn, when the "fair value" accounting of thinly-traded assets would allow me so much more room to hide my real financial condition? Heck, this crap is sweet enough to make even an honest banker crooked.