cranyinnyc's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/233317/comments http://seekingalpha.com/article/156321-a-granular-look-at-the-stratified-u-s-consumer?source=feed#comment-632023 632023

On Aug 16 11:12 AM wheelbarrelsofcash wrote:

> Stop whining like a little girl Jeff]]> Sun, 16 Aug 2009 13:13:22 -0400

On Aug 16 11:12 AM wheelbarrelsofcash wrote:

> Stop whining like a little girl Jeff]]> http://seekingalpha.com/article/156321-a-granular-look-at-the-stratified-u-s-consumer?source=feed#comment-631754 631754 Sun, 16 Aug 2009 10:49:45 -0400 http://seekingalpha.com/article/147888-has-sheila-bair-finally-learned-her-lesson?source=feed#comment-580709 580709 Thu, 09 Jul 2009 11:46:57 -0400 http://seekingalpha.com/article/128704-mark-to-market-of-course-not-at-par-that-s-par-for-the-course?source=feed#comment-446199 446199
one point to add is that if you don't have match funded term financing you can't pretend to hold the asset to maturity so you must mark it to market
]]> Tue, 31 Mar 2009 09:03:20 -0400
one point to add is that if you don't have match funded term financing you can't pretend to hold the asset to maturity so you must mark it to market
]]> http://seekingalpha.com/article/128284-a-loan-loss-reserve-primer-beyond-simplistic-ratios?source=feed#comment-443914 443914 Sun, 29 Mar 2009 09:17:32 -0400 http://seekingalpha.com/article/125966-fas-157-let-the-tweaking-begin?source=feed#comment-426254 426254
Other than temporary impairments in not new nor was it a product of FASB’s move toward more reliance on of fair market values. It existed in the S&L crisis.

Other than temporary impairments are only taken on assets that are designated by the banks as held to maturity and as a result the assets were valued at amortized historical cost. Such impairments are not automatic when the fair value is below amortized historical cost. In fact management has wide latitude and only has to book OTI charges when it is clear that even if they held the security to maturity they would not realize the amortized cost. Such OTI hits have been very modest thus far. They are not why banks face capital pressures.

By the loans are accounted on an analogous manner. When the banks expect they will not be repaid the full loan balance they are required to make provisions for loan loss reserves.

Stop trying to blame accounting you are only enabling zombie banks.



On Mar 15 08:43 AM bruggs wrote:

> The issues on mark-to-market are numerous. The biggest issue that
> has hurt banks in the past year is related to Other Than Temporary
> Impairment charges. This is where fair value accounting is absolutely
> broken. If a bank estimates that they will incur a loss in the future
> on an investment due to credit issues, it must mark that investment
> to market through earnings immediately (which hits capital).
>
> For example, many banks as well as the Federal Home Loan banks have
> securities which were originally Aaa that now have estimated losses.
> These estimated losses occur over 20 or 30 years and might be 2 or
> 3% of the balance. With market liquidity so strained, these securities
> are trading at 40 to 50% unrealized losses. So banks write off 50%
> of the bonds through earnings when they expect to receive 97% of
> the principal back.
>
> This accounting is non-sense. Allow the banks to mark the investment
> down by the estimated losses and not the fair value (when little
> or no bonds are trading). There are other OTTI examples like this.
> OTTI accounting needs to be reformed now.
>
> If loans were accounted for in this same manner, the entire banking
> industry would be undercapitalized. Banks are entities which raise
> deposits to fund illiquid assets. They earn net interest income cash
> flow from these assets and liabilities. Most banks (excluding the
> larger banks with broker dealers) do not actively trade assets. Why
> account for these activities using trading levels? It makes no sense.
>
>
> Let the banks get back to serving their purpose. Regulators need
> to restrict trading activities in the future to make sure the larger
> banks that were trading do not hurt the rest of the industry. Accountants
> need to reform the accounting policies to properly report the activities
> and cash flows of the banks (especially the banks which take deposits
> and lend without trading).]]> Sun, 15 Mar 2009 09:16:49 -0400
Other than temporary impairments in not new nor was it a product of FASB’s move toward more reliance on of fair market values. It existed in the S&L crisis.

Other than temporary impairments are only taken on assets that are designated by the banks as held to maturity and as a result the assets were valued at amortized historical cost. Such impairments are not automatic when the fair value is below amortized historical cost. In fact management has wide latitude and only has to book OTI charges when it is clear that even if they held the security to maturity they would not realize the amortized cost. Such OTI hits have been very modest thus far. They are not why banks face capital pressures.

By the loans are accounted on an analogous manner. When the banks expect they will not be repaid the full loan balance they are required to make provisions for loan loss reserves.

Stop trying to blame accounting you are only enabling zombie banks.



On Mar 15 08:43 AM bruggs wrote:

> The issues on mark-to-market are numerous. The biggest issue that
> has hurt banks in the past year is related to Other Than Temporary
> Impairment charges. This is where fair value accounting is absolutely
> broken. If a bank estimates that they will incur a loss in the future
> on an investment due to credit issues, it must mark that investment
> to market through earnings immediately (which hits capital).
>
> For example, many banks as well as the Federal Home Loan banks have
> securities which were originally Aaa that now have estimated losses.
> These estimated losses occur over 20 or 30 years and might be 2 or
> 3% of the balance. With market liquidity so strained, these securities
> are trading at 40 to 50% unrealized losses. So banks write off 50%
> of the bonds through earnings when they expect to receive 97% of
> the principal back.
>
> This accounting is non-sense. Allow the banks to mark the investment
> down by the estimated losses and not the fair value (when little
> or no bonds are trading). There are other OTTI examples like this.
> OTTI accounting needs to be reformed now.
>
> If loans were accounted for in this same manner, the entire banking
> industry would be undercapitalized. Banks are entities which raise
> deposits to fund illiquid assets. They earn net interest income cash
> flow from these assets and liabilities. Most banks (excluding the
> larger banks with broker dealers) do not actively trade assets. Why
> account for these activities using trading levels? It makes no sense.
>
>
> Let the banks get back to serving their purpose. Regulators need
> to restrict trading activities in the future to make sure the larger
> banks that were trading do not hurt the rest of the industry. Accountants
> need to reform the accounting policies to properly report the activities
> and cash flows of the banks (especially the banks which take deposits
> and lend without trading).]]> http://seekingalpha.com/article/125966-fas-157-let-the-tweaking-begin?source=feed#comment-426253 426253
Other than temporary impairments in not new nor was it a product of FASB’s move toward more reliance on of fair market values. It existed in the S&L crisis.

Other than temporary impairments are only taken on assets that are designated by the banks as held to maturity and as a result the assets were valued at amortized historical cost. Such impairments are not automatic when the fair value is below amortized historical cost. In fact management has wide latitude and only has to book OTI charges when it is clear that even if they held the security to maturity they would not realize the amortized cost. Such OTI hits have been very modest thus far. They are not why banks face capital pressures.

By the loans are accounted on an analogous manner. When the banks expect they will not be repaid the full loan balance they are required to make provisions for loan loss reserves.

Stop trying to blame accounting you are only enabling zombie banks.



On Mar 15 08:43 AM bruggs wrote:

> The issues on mark-to-market are numerous. The biggest issue that
> has hurt banks in the past year is related to Other Than Temporary
> Impairment charges. This is where fair value accounting is absolutely
> broken. If a bank estimates that they will incur a loss in the future
> on an investment due to credit issues, it must mark that investment
> to market through earnings immediately (which hits capital).
>
> For example, many banks as well as the Federal Home Loan banks have
> securities which were originally Aaa that now have estimated losses.
> These estimated losses occur over 20 or 30 years and might be 2 or
> 3% of the balance. With market liquidity so strained, these securities
> are trading at 40 to 50% unrealized losses. So banks write off 50%
> of the bonds through earnings when they expect to receive 97% of
> the principal back.
>
> This accounting is non-sense. Allow the banks to mark the investment
> down by the estimated losses and not the fair value (when little
> or no bonds are trading). There are other OTTI examples like this.
> OTTI accounting needs to be reformed now.
>
> If loans were accounted for in this same manner, the entire banking
> industry would be undercapitalized. Banks are entities which raise
> deposits to fund illiquid assets. They earn net interest income cash
> flow from these assets and liabilities. Most banks (excluding the
> larger banks with broker dealers) do not actively trade assets. Why
> account for these activities using trading levels? It makes no sense.
>
>
> Let the banks get back to serving their purpose. Regulators need
> to restrict trading activities in the future to make sure the larger
> banks that were trading do not hurt the rest of the industry. Accountants
> need to reform the accounting policies to properly report the activities
> and cash flows of the banks (especially the banks which take deposits
> and lend without trading).]]> Sun, 15 Mar 2009 09:16:49 -0400
Other than temporary impairments in not new nor was it a product of FASB’s move toward more reliance on of fair market values. It existed in the S&L crisis.

Other than temporary impairments are only taken on assets that are designated by the banks as held to maturity and as a result the assets were valued at amortized historical cost. Such impairments are not automatic when the fair value is below amortized historical cost. In fact management has wide latitude and only has to book OTI charges when it is clear that even if they held the security to maturity they would not realize the amortized cost. Such OTI hits have been very modest thus far. They are not why banks face capital pressures.

By the loans are accounted on an analogous manner. When the banks expect they will not be repaid the full loan balance they are required to make provisions for loan loss reserves.

Stop trying to blame accounting you are only enabling zombie banks.



On Mar 15 08:43 AM bruggs wrote:

> The issues on mark-to-market are numerous. The biggest issue that
> has hurt banks in the past year is related to Other Than Temporary
> Impairment charges. This is where fair value accounting is absolutely
> broken. If a bank estimates that they will incur a loss in the future
> on an investment due to credit issues, it must mark that investment
> to market through earnings immediately (which hits capital).
>
> For example, many banks as well as the Federal Home Loan banks have
> securities which were originally Aaa that now have estimated losses.
> These estimated losses occur over 20 or 30 years and might be 2 or
> 3% of the balance. With market liquidity so strained, these securities
> are trading at 40 to 50% unrealized losses. So banks write off 50%
> of the bonds through earnings when they expect to receive 97% of
> the principal back.
>
> This accounting is non-sense. Allow the banks to mark the investment
> down by the estimated losses and not the fair value (when little
> or no bonds are trading). There are other OTTI examples like this.
> OTTI accounting needs to be reformed now.
>
> If loans were accounted for in this same manner, the entire banking
> industry would be undercapitalized. Banks are entities which raise
> deposits to fund illiquid assets. They earn net interest income cash
> flow from these assets and liabilities. Most banks (excluding the
> larger banks with broker dealers) do not actively trade assets. Why
> account for these activities using trading levels? It makes no sense.
>
>
> Let the banks get back to serving their purpose. Regulators need
> to restrict trading activities in the future to make sure the larger
> banks that were trading do not hurt the rest of the industry. Accountants
> need to reform the accounting policies to properly report the activities
> and cash flows of the banks (especially the banks which take deposits
> and lend without trading).]]> http://seekingalpha.com/article/125966-fas-157-let-the-tweaking-begin?source=feed#comment-426150 426150 First, only assets (and liabilities) designated by the bank itself as TRADING assets are subject to mark-to-market accounting with the gains or losses impact earnings and consequently regulatory capital. Let me repeat the banks acquired the assets and THEY decided they wanted to use mark-to-market accounting because they INTENDED to trade the assets not hold them to maturity! Nobody 'forced' the banks to do this.

Second, when there no longer is a functioning market for a trading asset the banks can use Level 2 or Level 3 methods to value the assets (Level 1 is to use available quotes). Level 2 method looks to functioning markets of similar assets to derive key inputs such duration, discount rates etc. that the bank will use to value the assets based on its cash flows (so called marked-to-model). Level 3 can be best described as mark-to-myth. Assets valued this way have nothing to do with any quotes. The bank forecasts cash flows and durations then values these cash flows using discount rates they believe appropriate.

So assets that were once so liquid that the banks bought them to trade (i.e. never had the intention to hold them to maturity) but now there is a wide gap between what the bank thinks they are worth and the bids they are getting (if any) are now valued by the banks at values they think they are worth and not at the bid price.

Assets the banks designated as available for sale are subject to the same mark-to-market rules as the trading assets but the resultant gain or losses do not effect income (the gains or losses net of taxes are booked directly to equity through accumulated other comprehensive income or AOCI) nor do they have any impact on regulatory capital (AOCI is excluded from tier1 or core capital).

Third, the overwhelming majority of the banks’ assets (and more importantly the banks credit exposure and source of future losses) are valued at amortized historical cost.

Mark-to-market has neither forced banks to sell assets at prices they consider too low nor has it forced them to raise capital or sell other liquid assets to meet capital demands.

So why is mark-to-market ‘pro cyclical’ and why will its removal help?
]]> Sun, 15 Mar 2009 07:21:53 -0400 First, only assets (and liabilities) designated by the bank itself as TRADING assets are subject to mark-to-market accounting with the gains or losses impact earnings and consequently regulatory capital. Let me repeat the banks acquired the assets and THEY decided they wanted to use mark-to-market accounting because they INTENDED to trade the assets not hold them to maturity! Nobody 'forced' the banks to do this.

Second, when there no longer is a functioning market for a trading asset the banks can use Level 2 or Level 3 methods to value the assets (Level 1 is to use available quotes). Level 2 method looks to functioning markets of similar assets to derive key inputs such duration, discount rates etc. that the bank will use to value the assets based on its cash flows (so called marked-to-model). Level 3 can be best described as mark-to-myth. Assets valued this way have nothing to do with any quotes. The bank forecasts cash flows and durations then values these cash flows using discount rates they believe appropriate.

So assets that were once so liquid that the banks bought them to trade (i.e. never had the intention to hold them to maturity) but now there is a wide gap between what the bank thinks they are worth and the bids they are getting (if any) are now valued by the banks at values they think they are worth and not at the bid price.

Assets the banks designated as available for sale are subject to the same mark-to-market rules as the trading assets but the resultant gain or losses do not effect income (the gains or losses net of taxes are booked directly to equity through accumulated other comprehensive income or AOCI) nor do they have any impact on regulatory capital (AOCI is excluded from tier1 or core capital).

Third, the overwhelming majority of the banks’ assets (and more importantly the banks credit exposure and source of future losses) are valued at amortized historical cost.

Mark-to-market has neither forced banks to sell assets at prices they consider too low nor has it forced them to raise capital or sell other liquid assets to meet capital demands.

So why is mark-to-market ‘pro cyclical’ and why will its removal help?
]]> http://seekingalpha.com/article/125968-accounting-rule-changes-creating-false-rally-in-financials?source=feed#comment-426142 426142
First, only assets (and liabilities) designated by the bank itself as TRADING assets are subject to mark-to-market and the gain or losses impact earnings and consequently regulatory capital. Let's dwell on this for a moment the banks acquired the assets and they decided they wanted to use mark-to-market accounting because they INTENDED to trade the assets! no one 'forced' them to do so.

Second, when there no longer is a functioning market for a trading assets the banks can use Level 2 or Level 3 methods to value the assets (Level 1 is to use availble quotes). Level 3 can be best described as mark-to-model -it has nothing to do with any quotes. The bank forecasts cashflows and durations then values these cashlows using discount rates they believe appropriate.

So assets that were once so liquid that the banks bought them to trade (ie never had the intention to hold to maturity) and now turns out that there is a wide gap between what the owner and the potential buyer thinks they are worth are now valued by the banks at values they think they are worth and not at the bid price.

Assets the banks designated as available for sale are subject to the same mark-to-market rules as the trading asstes but the resultant gain or losses do not effect income (they are booked directly net of taxes to equity through accumulated other comprehensive income or AOCI) nor dor they have any impact on regulator capital.

Third, the overwhelming majority of the banks assets (and more importantly the banks credit exposure and source of future losses) are valued at amortized historical cost.

Mark-to-market has neither forced banks to sell assets at prices they consider too low nor has it forced them to raise capital or sell other liquid assets to meet capital demands.


On Mar 15 03:01 AM ccerenz2 wrote:

> This author clearly doesn't understand the negative downward pressure
> that Mark to market has on assets in a declining market.]]> Sun, 15 Mar 2009 06:57:07 -0400
First, only assets (and liabilities) designated by the bank itself as TRADING assets are subject to mark-to-market and the gain or losses impact earnings and consequently regulatory capital. Let's dwell on this for a moment the banks acquired the assets and they decided they wanted to use mark-to-market accounting because they INTENDED to trade the assets! no one 'forced' them to do so.

Second, when there no longer is a functioning market for a trading assets the banks can use Level 2 or Level 3 methods to value the assets (Level 1 is to use availble quotes). Level 3 can be best described as mark-to-model -it has nothing to do with any quotes. The bank forecasts cashflows and durations then values these cashlows using discount rates they believe appropriate.

So assets that were once so liquid that the banks bought them to trade (ie never had the intention to hold to maturity) and now turns out that there is a wide gap between what the owner and the potential buyer thinks they are worth are now valued by the banks at values they think they are worth and not at the bid price.

Assets the banks designated as available for sale are subject to the same mark-to-market rules as the trading asstes but the resultant gain or losses do not effect income (they are booked directly net of taxes to equity through accumulated other comprehensive income or AOCI) nor dor they have any impact on regulator capital.

Third, the overwhelming majority of the banks assets (and more importantly the banks credit exposure and source of future losses) are valued at amortized historical cost.

Mark-to-market has neither forced banks to sell assets at prices they consider too low nor has it forced them to raise capital or sell other liquid assets to meet capital demands.


On Mar 15 03:01 AM ccerenz2 wrote:

> This author clearly doesn't understand the negative downward pressure
> that Mark to market has on assets in a declining market.]]> http://seekingalpha.com/article/123716-death-of-the-big-bank-model?source=feed#comment-410656 410656
gotta love that bullet -you proved the bank doesn't have to be big to be run by a CEO with a huge ego]]> Tue, 03 Mar 2009 07:20:13 -0500
gotta love that bullet -you proved the bank doesn't have to be big to be run by a CEO with a huge ego]]> http://seekingalpha.com/article/121147-barron-s-is-way-off-base-regarding-mark-to-market?source=feed#comment-393196 393196
I thought you have followed the banks for some time? Why have you not pointed out that Mark-to-market while it affects GAAP equity it has no impact whatsoever on banks' regulatory capital and therefore is not procyclical. Only when the bank determines part of the loss to be an other than temporary impairment (OTI) will it impact the bank's regulatory capital. The same would apply if the asset was classified as hel to maturity. Secondly, by far the largest component of risk facing the banks is the credit risk imbedded in their loan portfolio. Loans (other than those held for sale -which are marked to market) are held for investment and are not subject to mark to market. ]]> Wed, 18 Feb 2009 08:36:37 -0500
I thought you have followed the banks for some time? Why have you not pointed out that Mark-to-market while it affects GAAP equity it has no impact whatsoever on banks' regulatory capital and therefore is not procyclical. Only when the bank determines part of the loss to be an other than temporary impairment (OTI) will it impact the bank's regulatory capital. The same would apply if the asset was classified as hel to maturity. Secondly, by far the largest component of risk facing the banks is the credit risk imbedded in their loan portfolio. Loans (other than those held for sale -which are marked to market) are held for investment and are not subject to mark to market. ]]> http://seekingalpha.com/article/109770-barron-s-laing-s-mortgage-relief-plan-could-actually-work?source=feed#comment-324431 324431
i think you're missing the most important reason Tom's pushing this -it must benefit his deeply underwater mortgage long positions (how's that IMB position doing for ya Tom?)]]> Tue, 09 Dec 2008 07:27:39 -0500
i think you're missing the most important reason Tom's pushing this -it must benefit his deeply underwater mortgage long positions (how's that IMB position doing for ya Tom?)]]> http://seekingalpha.com/article/109777-canadian-banks-q4-better-than-expected-td-newcrest?source=feed#comment-324425 324425
"Fourth quarter bank earnings weren't pretty, but long-term fundamentals remain far more stable than what is currently priced into the market..."

so that's why he cut his price targets on 4 (RY-Hold, NA-Buy, LB-Hold, BMO-Hold) of the 7 Canadian Banks in his coverage by an average of 19.4% while keeping the other 3 (CWB-Hold, CM-Buy, BNS-Buy) unchanged. Well that's a new version of stable long-term fundementals - i guess he must have been previous mis-valuing those 'fundementals'

and how's his track record? let's see according to bloomberg he's covered all but LB and CWB for atleast 1 year and for the other 5 he had the same rating on each a year ago as he presently has.

Yesterday 1 year ago Change
RY Hold $37.50 $52.31 -28.3%
NA Buy $37.55 $53.85 -30.3%
CM Buy $53.27 $80.26 -33.6%
BNS Buy $34.76 $52.23 -33.4%
BMO Hold $36.12 $59.66 -39.5%

Average All -33.0%
Avg. Buys -32.4%
Avg. Holds -33.9%

oh and let's not forget the 18.8% drop in the value of the Canadian currency during the period for those of us who are playing in US$
]]> Tue, 09 Dec 2008 07:12:31 -0500
"Fourth quarter bank earnings weren't pretty, but long-term fundamentals remain far more stable than what is currently priced into the market..."

so that's why he cut his price targets on 4 (RY-Hold, NA-Buy, LB-Hold, BMO-Hold) of the 7 Canadian Banks in his coverage by an average of 19.4% while keeping the other 3 (CWB-Hold, CM-Buy, BNS-Buy) unchanged. Well that's a new version of stable long-term fundementals - i guess he must have been previous mis-valuing those 'fundementals'

and how's his track record? let's see according to bloomberg he's covered all but LB and CWB for atleast 1 year and for the other 5 he had the same rating on each a year ago as he presently has.

Yesterday 1 year ago Change
RY Hold $37.50 $52.31 -28.3%
NA Buy $37.55 $53.85 -30.3%
CM Buy $53.27 $80.26 -33.6%
BNS Buy $34.76 $52.23 -33.4%
BMO Hold $36.12 $59.66 -39.5%

Average All -33.0%
Avg. Buys -32.4%
Avg. Holds -33.9%

oh and let's not forget the 18.8% drop in the value of the Canadian currency during the period for those of us who are playing in US$
]]> http://seekingalpha.com/article/91765-whose-freddie-investment-thesis-is-right?source=feed#comment-234657 234657
Since when is equity considered an obligation? The common and preferred equity of the GSEs is risk capital that is leveraged with borrowings. No sacred trust would be broken if the US Treasury's action resulted in the loss of these shareholders' investment. If they are going to be made 'riskless' why should they reap the upside and why would the Treasury just Nationalize the GSEs?]]> Wed, 20 Aug 2008 09:15:27 -0400
Since when is equity considered an obligation? The common and preferred equity of the GSEs is risk capital that is leveraged with borrowings. No sacred trust would be broken if the US Treasury's action resulted in the loss of these shareholders' investment. If they are going to be made 'riskless' why should they reap the upside and why would the Treasury just Nationalize the GSEs?]]> http://seekingalpha.com/article/90899-mbia-s-momentous-2q-need-more-evidence-that-the-turn-has-arrived?source=feed#comment-230471 230471 ]]> Thu, 14 Aug 2008 14:26:36 -0400 ]]> http://seekingalpha.com/article/90156-financials-bottoms-happen-when-everyone-s-convinced-they-won-t?source=feed#comment-227363 227363 Sun, 10 Aug 2008 20:02:20 -0400 http://seekingalpha.com/article/90156-financials-bottoms-happen-when-everyone-s-convinced-they-won-t?source=feed#comment-227057 227057 Sun, 10 Aug 2008 09:11:05 -0400 http://seekingalpha.com/article/87275-istar-financial-on-the-shelf?source=feed#comment-217691 217691 Tue, 29 Jul 2008 15:44:37 -0400 http://seekingalpha.com/article/87275-istar-financial-on-the-shelf?source=feed#comment-216966 216966 Sorry but depreciation depletion and amortization eventually have to be earned and are not reversable. they are not 'Impairments' the dividends they paid have only been supported by equity raises that permit growth. Provisions for loan losses or other credit related charges that are not cash are reversable if the actual loss realized is lower. that in this enviroment is not a slam dunk. I stand by my critique of your assertion that investors should pay no heed to dividends in excess of gaap earnings. they should ]]> Mon, 28 Jul 2008 20:20:15 -0400 Sorry but depreciation depletion and amortization eventually have to be earned and are not reversable. they are not 'Impairments' the dividends they paid have only been supported by equity raises that permit growth. Provisions for loan losses or other credit related charges that are not cash are reversable if the actual loss realized is lower. that in this enviroment is not a slam dunk. I stand by my critique of your assertion that investors should pay no heed to dividends in excess of gaap earnings. they should ]]> http://seekingalpha.com/article/87275-istar-financial-on-the-shelf?source=feed#comment-215983 215983 you are correct to say taxable income and not gaap income is the relevant measure for REITS because that is the measure that they are required to pay at least 90% in the form of dividends to keep their REIT status but and this is an important but over time those 'non-cash' items that GAAP expenses faster than taxable income or analyst or mgmt waive away in their FFO calculations are important. If dividends are greater than GAAP earnings for a meaningful period either the company is 'self-liquidating' or it has to raise fresh equity. So in the end it is importanat for a REIT's dividend to be 'earned' even in GAAP terms]]> Sun, 27 Jul 2008 18:54:27 -0400 you are correct to say taxable income and not gaap income is the relevant measure for REITS because that is the measure that they are required to pay at least 90% in the form of dividends to keep their REIT status but and this is an important but over time those 'non-cash' items that GAAP expenses faster than taxable income or analyst or mgmt waive away in their FFO calculations are important. If dividends are greater than GAAP earnings for a meaningful period either the company is 'self-liquidating' or it has to raise fresh equity. So in the end it is importanat for a REIT's dividend to be 'earned' even in GAAP terms]]>