o.O

[solarbird]

I saw this on Naked Capitalism and thought it was a joke, but it isn't:

The action by the four banking agencies provides more favorable accounting treatment of so-called good will, an intangible asset that reflects the difference between the market value and selling price of a bank. ... Under the proposal issued this week, the regulators would permit buyers of banks and thrifts to count some of the good will toward meeting their regulatory capital requirements.

GOODWILL IS NOT FUCKING FUNGIBLE. GOODWILL IS DEFINITIONALLY NOT QUANTIFIABLE. GOODWILL IS. NOT. MONEY.

...this is Imaginationland crazy. This is Wackyland crazy. I...

Good luck.

Comments

[silussa.livejournal.com]

I note from the article that they did this once before, with the S&L crisis. It was helpful in the short term, but ran up the costs in the long run when they took it away again.

I'm more concerned about relaxing the rules so money can be moved from more to less regulated/higher hazard areas...from commercial banks to investment banking, for instance.

However, I feel confident that whatever the regulators say, the accounting profession is not about to change its rules: a loss is a loss is a loss.

[solarbird]

Tell that to the Level 3 Asset Class.

[silussa.livejournal.com]

I must admit, that's a term I'm not familiar with. What IS a "Level 3 Asset Class"?

[solarbird]

Basically it's mark-to-fantasy. If you declare a market improperly or inadequately liquid for a type of security you're holding, you can declare that market value is irrelevant and set an actual value based on what you think it should sell for. All of these calls are up to you the owner. So as a result it's been grossly and brutally abused, and there are a lot of assets at various major players hiding out in Level 3 these days.

[silussa.livejournal.com]

The FASB actually WROTE a rule allowing that?

What were they smoking that day? It SO violates the fundamentals of accounting that I don't even want to think about it.

[solarbird]

Welcome to my world of wtf. This was, hum, six months ago or so? I forget.

[angharads-house.livejournal.com]

yeah, haywire.

will refrain from the usual digs about corruption and just observe that this is all playing out about as expected, with the sincere hope that some of the firebreaks hold against a general collapse (lived through something worse than this once already: it is survivable, just not happy-causing).

[cafiorello.livejournal.com]

Are we in Bizarro World or what????

Cathy

Although, if I can count MY goodwill in MY net worth....

[interactiveleaf.livejournal.com]

Hello; I found this journal because ginmar mentioned you, and I've added you as a friend because your journal really rocks.