[wagglebee]

So the banks can mark a toxic asset worth crap into a much higher value to show faked big assets on their balanced sheet.

No, this will allow banks to mark an asset at what they one day hope to be able to sell it for. If the bank has enough liquidity to hold onto the asset there is no reason they should be forced to undervalue it.

[jveritas]

OK. Enjoy the triumph of socialism via this small trick. The markets will go up because of this trick, people will say Obama is great, he will screw us further with socialism and we can do nothing about it. Then the whole economy will come tumbling down.

[proxy_user]

This is a difficult question.

Say you have a mortgage that is more than the value of the house, but the homeowner is making the monthly payments anyway.

It would be hard to value such a mortgage at either 100%, which is what traditional bank accounting calls for, or at the 50% a speculator might be willing to pay.

[expatpat]

That is true only if the banks go back to more conservative leverage ratios. This action, plus high leverage, would mean the banks could be on the edge of insolvency.