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
Economic Straight Talk

Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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** through The Ian R. Campbell Research Initiative

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