France's biggest banks say that fair-value accounting would threaten the stability of entire banking systems.
Gradually introduced and carefully explained, fair-value accounting should make for a more transparent and sound financial system.
We're in a market-based economy, where we're looking at fair-value accounting and marking instruments, to the markets.
The solution, the regulators believe, is to press bravely ahead and impose fair-value rules for all financial instruments.
The FASB has yet to produce proposals on financial assets and is more wedded to a fair-value regime.
Moreover, fair-value accounting appears to play a part in the upswing of a cycle as well as in the downswing.
ECONOMIST: An accounting standard comes under the microscope
The most immediate is the mark-to-market, or so-called fair-value accounting, rules that regulators have been enforcing since the early 1990s.
It is striking that executives at American investment banks, which have long been subject to fair-value rules, largely accept the regime.
ECONOMIST: An accounting standard comes under the microscope
Our index suggests that a fair-value rate would be 3.54 yuan to the dollar, compared with the current rate of 6.78.
Growth in the use of derivatives is part of the fair-value challenge.
Based on fair-value accounting rules, Goldman forced lower fire-sale marks on the industry which put some financial institutions out of business almost overnight.
Regulators also need to bear in mind that one of the central assumptions of the fair-value regime has not worked out quite as planned.
ECONOMIST: An accounting standard comes under the microscope
Critics say the practice, also known as fair-value accounting, overstates losses.
Britain is slightly ahead on this, since its own rules ensure more fair-value reporting, although some important requirements will not apply to non-listed companies until next year.
Mr Isaac reckons that many of the measures that were introduced to instil discipline notably fair-value accounting, which forces banks to mark assets to the prevailing market price actually exacerbated the latest crisis.
There is enough wiggle room in the accounting rules for banks not to be bound by this price level but the news from Merrill signals the likelihood of more fair-value losses to come.
Fair-value accounting is an absurdity for financial institutions.
This is as investor I will know that if I have a personal cash shortage I will be able to sell out to another investor for something close to fair-value with a relatively short waiting time.
For instance, the recent guideline on fair-value accounting, which decrees that companies must show equity holdings at their market value, also contains a provision that allows them to avoid writing down shares if they think that they will soon recover in value.
Other government policies that have distorted financial markets, thereby undermining the EMH, include shielding credit-rating agencies from lawsuits, government-sanctioned fair-value accounting rules, enforcing credit-default swaps where there is no insurable interest, mispriced deposit insurance, government-sponsored enterprises, and the over-promotion of home ownership.
"In the event that the credit ratings for one or more of these financial guarantors were downgraded, or if CIBC's own assessment of the credit status of any of the financial guarantors deteriorated significantly, it is possible that CIBC would make additional fair-value adjustments, " the bank said.
Alan Greenspan's not-so-secret model pegs 8000 as the Dow's fair-market value.
Today, if the bad bank pays above the fair-market value, it would raise the cost to taxpayers, imperil its political legitimacy, and deprive the market of badly needed transparency.
He said the company is domiciled in the Caymans so it would receive similar tax treatment to a REIT, and that all transactions between HLSS and Ocwen are done at a fair market-value price.
If so-called fair value accounting had been in place then, just about every large bank would have collapsed.
However, the relationship between prices and GDP per head can be used to estimate the short-term fair value of a currency relative to others.
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Just as important, the Administration must deal decisively with the insanity of mark-to-market, or so-called fair value, accounting that has forced institutions under severe pressure from regulators and accountants to maniacally mark down to absurdly low levels the value of unmarketable securities and assets, thus destroying entities that have positive cash flows.
ABN-Amro reckons that fair value for American equities is 22 times earnings, compared with 17 for British shares and 19 for the euro-area.
Even with Fannie and Freddie inflating the bubble and the Fed and the rest of the Bush Administration weakening the dollar, the crisis never would have become so unprecedentedly destructive but for a seemingly arcane accounting principle called mark-to-market, or fair value, accounting.
If you can actually sell it, you will probably do so at 5-10% of its fair market value.
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