Xorthfred

Feel Free to Make up Numbers

I have lived this movie before in the great commercial real estate crash in the southwest (1988-1994) and elsewhere. If we had FASB 157, every bank in the country would have failed. Also, as i recall, writing mortgages to market when interest rates went to 19% in 1980-1982 would have also forced every thrift in the country to failure. Anyone with any real estate banking experience in appraisal or as a senior credit officer can tell you that the quarterly mark to market of long term assets (long term loans of any kind) will result in a rapid death spiral of asset values. After the spiral bottoms out in mass graves, the buyers pick up mortgages for pennies on the dollar, yielding as much as 95% per annum at "market value" because that is where they are traded. We sold office buildings in Dallas, Texas for $12 per square foot when rents were at $7 per square foot-which was where the forced sale "market value" whereby Canadians, Hong Kong investors and Brits bought our assets-(taxpayers FDIC taking the hit all along). Thank you so much (I am being sarcastic) Sarbanes Oxley, the "new RTC" (which was not a success but a govt. failure) and the heavy hand of regulation.