Mark-to-Market Rule Changes - When Will They Come 'Home to Roost'?

By: Ian Campbell | Thu, Oct 4, 2012
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Why read: To compare the views I expressed almost four years ago, to test those views against subsequent events, and to determine if you agree with my current views.

Commentary Then: On October 8, 2008, four years ago, and but two weeks after the collapse of Lehman Brothers, I expressed concern with new guidelines the U.S. Securities and Exchange Commission than provided on the 'mark-to-market' accounting rules that prevailed to that point. At that time I said (condensed):

Commentary now: To date, there has been no real or readily observable fallout from the change in market-to-market rules made in the fall of 2008 and weakened further in the spring of 2011. I have intuitively believed since those accounting rules were changed that many Bank and Investment Bank balance sheets very likely have reflected and currently reflect overstated book shareholders' equity positions - often referred to as net book value, being the difference between total book assets and total book liabilities as reflected in the financial statements prepared in accord with 'generally accepted accounting principles'.

What currently is going on in Spain may be but an early representation of what may go on with many of the large world Banks and Investment Banks in the next months and years.

Read the full text of my October 1, 2008 commentary at New SEC Guidance - Sleight of Hand Never Works In The Long Term.

Reading time 4 minutes

 


 

Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
Business Transition Simplified

Through his www.BusinessTransitionSimplified.com website and his Business Transition & Valuation Review newsletter Ian R. Campbell shares his perspectives on business transition, business valuation and world economic and financial markets influences on those two topics. A recognized business valuation and transition authority, he founded Toronto based Campbell Valuation Partners Limited (1976). He currently is working to bring his business valuation and transition experience to both business owners and their advisors in our new economic, business and financial markets normal.

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