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Mark to Make Believe

I have to share this gem from Barry Ritholtz:

"Thanks to the Congressionally mandated FASB rule changes back in March
of 2009, Mark-to-Market has been changed to Mark-to-Make-Believe.

We do
not know if these banks are actually profitable, whether they are barely
solvent (Chase/JPM), somewhat insolvent (BofA) or totally insolvent


Barry believes the bonuses are based on 'massive fraud.'  The government gives money to the banks at 0% and then borrows that same cash by issuing bonds that pay 3%.  How difficult is it to make money when doing that?

I must agree.  Sure the bonuses make me angry, but the bonuses are not the major issue. It's that these banks were bailed out to contribute to the economy.  They were supposed to lend money to qualified borrowers and to help small business survive and prosper.

Why take that risk when the government hands them a free, 3% arbitrage opportunity?  This stinks.  And the new, proposed tax isn't good enough.


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