tag:blogger.com,1999:blog-6616959642391988608.post4857783413661845158..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Housing prices continue to fall (3)Scott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-6616959642391988608.post-18308311921624442622009-02-25T14:46:00.000-08:002009-02-25T14:46:00.000-08:00Excellent points, thanks for contributing to the d...Excellent points, thanks for contributing to the discussion.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-29361825966230802972009-02-25T14:08:00.000-08:002009-02-25T14:08:00.000-08:00Bernard, Ditto what Dan says plus: The account...Bernard,<BR/> Ditto what Dan says plus:<BR/> The accounting rules for financial institutions were changed -- in 2007. We had the same rules from 1938 to 2007 without these kinds of problems. The issue is financial insitutions having to take write-offs and balance sheet hits on assets that are still producing cash flow just because current market value is down. If we had the same accounting Don Harrisonhttps://www.blogger.com/profile/17754112569609750210noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-8991848241175151152009-02-25T09:49:00.000-08:002009-02-25T09:49:00.000-08:00Bernard, there is no "other side of the trade". Ma...Bernard, there is no "other side of the trade". Many banks and financial companies are marking to market securities that they have no intention to sell. They are holding them on their balance sheet, receiving payments on principal and interest (just listen to State Street), and yet they are being forced to mark down their securities based on other people's trades. It is insane. And MTM is not DanQhttps://www.blogger.com/profile/18009589414137471279noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-24466248236523419422009-02-24T10:43:00.000-08:002009-02-24T10:43:00.000-08:00Then why not change the mark to market rules on ho...Then why not change the mark to market rules on homes and allow people who want to re-finance at a lower rate do so regardless of the value of the home as perceived by relative comps?<BR/><BR/>What is good for the banks must be good for the home owner, no?<BR/><BR/>Probably because the people on the other side of the trade (banks) want a solid assessment of the underlying value of the asset they Public Libraryhttps://www.blogger.com/profile/00017383928897945054noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-36939137112037021812009-02-24T09:47:00.000-08:002009-02-24T09:47:00.000-08:00I think it is also signficant that every time ther...I think it is also signficant that every time there has been even a whisper about changing m-t-m rules, or changing them under another name, as in the original TARP program, the market has surgedDon Harrisonhttps://www.blogger.com/profile/17754112569609750210noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-87182426234145622742009-02-24T09:34:00.000-08:002009-02-24T09:34:00.000-08:00I'm very sympathetic to the argument that MTM acco...I'm very sympathetic to the argument that MTM accounting has exacerbated the problems faced by banks today. Subprime securities are exceedingly difficult to understand and model (i.e., they lack transparency), so it is not difficult to believe that a distressed market (lots of forced sellers, a dearth of willing buyers) can misvalue them. If they are underpriced, that triggers downgrades and moreScott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-47109329040534724442009-02-24T09:25:00.000-08:002009-02-24T09:25:00.000-08:00Scott, On an unrelated note, I wonder if you hav...Scott,<BR/> On an unrelated note, I wonder if you have an thoughts on mark-to-market accounting. Brian Wesbury, William Isaac, Bob McTeer and a few others seem to be the only ones arguing that the rules need to be changed.Don Harrisonhttps://www.blogger.com/profile/17754112569609750210noreply@blogger.com