[AmericaUnited]

So far, banks have been unwilling to do so, because they've been valuing the debt way above market value in order to maintain capital ratios.

But they will either sell (at a "market/book" clearing price) to the FEDS or DIE. They will have no choice.

[koraz]

So far, banks have been unwilling to do so, because they’ve been valuing the debt way above market value in order to maintain capital ratios.

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Do you have facts to support that?? Any audited company (which all the banks are) would need to take the write-down every quarter when they release earnings. In these days of Sarbanes Oxley, no auditor would allow a company to release earnings that didn’t have an “attempt” to write them down to market.

IMO, the issue is that the write-downs have been taken but right now they are paper losses. By selling to the goverment, they become real losses.