” Mark to market....LOL! “
Heaven forbid that all of the ‘big banks’ carry these assets on their books at their real (liquid) value...
All that honesty would surely bring the whole ‘too big to fail’ system down....
(By the way - doesn’t the FED hold untold billions of these inflated ‘assets’???)
This has GREEK SWAPS written all over it...
And explains the Goldman-Sachs call for MORE QE on Friday.
To answer your other question, it came out Monday that the FED was holding $177 BILLION in “Other assets”.
TRANSALTION: Stocks the FED has been propping for the last 5 months.
What’s funny is all the regs put in place were suppose to end this crisis.
Time for another crisis.
Oh for Crisis sake.
Here is the problem. What is the real value? A mortgage that is current is a contract and the value of the contract is what the home owner agreed to pay, not the underlying value of the asset.
However, if it is show that the contract is not being followed (late payments, etc) then the contract is devalued down to a new level. What is that new level? Mark to market establishes the current value of that contract as the current retail value of that asset.
But the value of a house that just sold in the neighborhood is not likely to be the value of that asset. There is now cost associated with administration of the sale of that asset. The proper way should be to value the asset lower than current market by some amount that represents the cost of selling that asset.
I am of the opinion that valuation should be mark to contract until the home owner falls behind. Then mark to less than market (say 10% less) once there is a late payment of say 60 days or more.
“(By the way - doesn’t the FED hold untold billions of these inflated ‘assets’???)”