Roland Cycan

FASB Watch: Who Should Make the Economic Calls?

How about issuing two statements, side by side.

One is in accordance with FASB's rules. The other is an accordance with Barney Frank's rules.

Let people rely on whichever they choose.

International Valuation Standards: The Only Viable Alternative to Mark-to-Market

Goldman Sachs, AIG, Blackrock, and other big financial institutions have thousands, or tens of thousands, of outstanding financial assets that are not easily valued.

They simply cannot have a process that is expensive, tedious, and time consuming each quarter end. I disagree with you when you say that the expense, tediousness, (and time consumption?) involved is not a reason for not doing the valuation properly (properly meaning by IVS standards). I say that it is a reason, and a good one.

U.S. Debt Surpasses $11 Trillion But Day of Reckoning Is Still Ahead

So, how does the Govt get into debt destruction mode for its own debt?

International Valuation Standards: The Only Viable Alternative to Mark-to-Market

This is very interesting in concept, but the apparent difficulty of valuing other than market value assets may be its undoing. If it is difficult (and therefore expensive and lengthy in terms of time) it probably isn't practical on the scale needed for the financial markets and finanncial statements.

If you could pick a representative sample of real and difficult to value assets (a CDO, a CMO, a CDS, a severely undervalued stock trading on an exchange [Citi?], perhaps some major multimillion dollar equipment piece) and walk through the evaluations, it would lend credence to your arguements.

BofA, Wells Fargo: No Equity After Accounting for Bad Loans

Actually, most accountants are rather conservative in their treatment. Conservatism is, or was when I went to school, taught and usually expressed as taking the option from among the reasonable options that shows the lowest income this year (or lowest current value).

After all, you really don't want to report to your investors that assets are worth $100 when collectability of that $100 is in reasonable doubt.

However, most senior managers do not want conservateive statements prepared. They prefer aggressive accounting, and for most of the last couple of decades got away with it. They were also in position to override their staff accountants' judgements, and to influence the duditing firms ( may need a different auditor next year after all, and similar veiled threats ).

Boards of Directors should insist that the Chief Accounting Officer (sometimes the CFO, sometime not) report directly to the Board, not to the the CEO. And they should do what they can to remove influence of the CEO in choosing auditors.

The accounting staff cannot be watchguard for the Board if they report to the CEO.




On Mar 05 11:34 PM dare16 wrote:

> Fair value accounting should be abolish, it is an evil which make
> co achieve better performance when the economy is good but make financial
> statement worse than it should have when economy is bad.

Unintended Consequences of Four Government Policies

"...the short term devaluation of the mortgage backed securities
..."

If the market believed the devaluation was short term, people would be rushing to buy them. Can you show me, please, that the devaluation is short term. I believe that it is long term.


And, I agree with the sentiment expressed by Brahm about protecting investors. How would you feel if you bought a stock based on its financial statements, only to be told shortly thereafter, those assets on our books, well the fair value of them is only 50% of what we are carrying them at on the statements? You'd have been lied to and screwed and you'd be right to be mad as hell.

Why Doesn't the Market Listen?

Gold standard. Good God. There's not enough gold in the world for it to be a reasonable basis for major currencies.

Gladstone Capital Corp. F2Q08 (Qtr End 03/31/08) Earnings Call Transcript

He rambles a lot.

United Technologies' Molten Salt Solar Power Generation

1200 acres? That's a lot of acres in one spot, and for only 1050 homes it can't be economical.

American Capital Strategies: Dividend Analysis

Focuses too much on the past and not enough on the future.

Thornburg Mortgage Must Sell Its Soul to Stay Afloat

It's a huge price to pay, but the alternative, a chapter 11 filing, is probably worse for the common shareholders.

Recent events have really highlighted the flaw in the common REIT model of borrowing short and lending long. REIT's may have to adapt to a less leveraged business practice. It might even be wise for congress to do away with the favorable tax treatment of the current model to incentivize better business practices.

Thornburg's a Huge Bargain After Monday's Crash

TMA said they issued CMO's. Typically that is a sale, selling the future cash flows for a current lump sum. They said it was profitable. Who else would have better knowledge?

As an aside, current market conditions have pointed out a deep flaw in the REIT structure, the need to pay so much of their income as dividends. They can't really accumulate any retained earnings (reserves) for when times turn bad.

When times are good, the model works. When times are bad, they are forced to sell new stock, but when times are bad, the stock price is low.