FASB has allowed derivatives to be marked to model rather than market. This has provided the financial sector with generous trading profits which drove earnings and bonuses in 2009 (we'll see about 2010).
The collateral behind the above derivatives have been called into question through an increasing number of civil suits. No wonder Wall Street's reaction to these suits has been relatively muted and indirect. As Jim suggests, debt instrument that cannot access its collateral and does not yield raises serious questions to the mark-to-model valuations allowed by FASB.
Bank of America extended its foreclosure freeze to all 50 states as it continues internal "assessments" of its foreclosure practices. "Our ongoing assessment shows the basis for our past foreclosure decisions is accurate," reads their statement.
Source: finance.yahoo.com
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