RaulClimaco

Another Big Bank Failure: More Likely Than Not to Occur

Mortgage pass-through servicing, for instance. What do you think accountants call a title that gives the buyer the obligation, but not the right, of providing a service that may or may not be profitable (or even break even) when the time comes ?? An ASSET !! An asset that is a potential liability !! In fact often an immediate liability, because it is booked at the current inflated market price. This is by far the nicest toxic "asset" in the MBS world; but thinking about it is very instructive. People who do not act as someone who understands these trivia are viewed as financial geniuses, and those who do are periodically weeded out, in the interest of maintaining salutary executive compensation schemes based on "profits" generated by said executives.
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On Dec 30 02:56 PM chicagoguy4 wrote:

> It is time for the accounting to reflect true assets rather than
> speculations. The banks fall is based upon a failure of the banks
> to make a true evaluation of what is carried on the books as an asset.