Entry in progress—B.P.
Wikipedia: Mark-to-market accounting
Mark-to-mark or fair value accounting refers to accounting for the fair value of an asset or liability based on the current market price of the asset or liability, or for similar assets and liabilities, or based on another objectively assessed “fair” value. Fair value accounting has been a part of Generally Accepted Accounting Principles (GAAP) in the United States since the early 1990s, and has been used increasingly since then.
Mark-to-market accounting can change values on the balance sheet frequently, as market conditions change. In contrast, historical cost accounting, based on the past transactions, is simpler, more stable, and easier to perform, but does not reflect current fair value at all. It summarizes past transactions instead. Mark-to-market accounting can become inaccurate if market prices change unpredictably. Buyers and sellers may claim a number of specific instances when this is the case, including inability to accurately collectively value the future income and expenses, often due to unreliable information, over-optimistic, and over-pessimistic expectations.
>i>What Does Mark To Market - MTM Mean?
1. A measure of the fair value of accounts that can change over time, such as assets and liabilities. Mark to market aims to provide a realistic appraisal of an institution’s or company’s current financial situation.
2. The accounting act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value.
3. When the net asset value (NAV) of a mutual fund is valued based on the most current market valuation.
Mark to Market replaced with Mark to Fiction per FASB
stocks move higher and torch short postions
by MikeM-NJ April 2, 2009 11:32 AM
Time to Short the Banks: Pros, Cons and Ramifications
by: Cliff Wachtel October 19, 2010
ain’t no fortunate son
19 Oct 2010, 09:24 AM
One of the many things that have been conveniently forgotten, and not by accident, is that the “Too Big To Jail” bank balance sheets are a disaster when you consider that the only two things keeping them “solvent” are the repeal of FASB Rule 157 Mark to Market and massive stealth monetization of Treasuries by the FED via POMO’s that have pumped hundreds of billions of new dollars onto the bank balance sheets. They can carry these “assets” (GOD I love the irony in that word) at basically any ridiculous level they want to… many now call this specious accounting methodology “mark to fiction,” or “mark to unicorn.” The change came about in early 2009 when the Congress let itself be pressured (dare I say bribed?) by the ABA big bank lobby to force FASB to make the change… it was part of the old cold war inspired MAD (Mutual Assured Destruction) ruse that the banks were running on a naive new president through the pressure to continue the bailouts and push through QE that led to Obama’s exit from the big meeting in early March ‘09 saying he thought the market was a “buy.”
New York City • Banking/Finance/Insurance • (0) Comments • Wednesday, July 06, 2011 • Permalink