Sparked a nice bounce today - Can this even be done? Would it be legal? Isn't this type of behavior what got us into trouble in the first place? Hellooo reality What about transparency? I did a refi near the top of the bubble, didn't cash out. The appraiser said my house was worth over one million - even gave that number to the bank. I was laughing at him telling him he was full of shit. Things are worth what they are worth. I can tell you my home is worth x, or car worth x, but that doesn't make them worth more than they are worth.
Suspending mark-to-market would solve one of the major problems haunting the banking sector. FALSE! This is the most stupid idea ever. It only decreases transparency and adds more uncertainty to an already shitty market. If the bid on shitty assets is 10 cents on the dollar? It's only worth 10 cents. Sure it could go up. But it could also go DOWN! If this rumor was the reason for today's gay rally, then we're all about to be bent over a barrel and FUCKED. Say some idiot bought a $4,000,000 home in Malibu and it's only worth $1,000,000 now and depreciating rapidly. Would you lend him money at the 4 million dollar valuation? What if you didn't know the current market at all? Is it still a smart decision to lend?
I agree that it would be an awful thing to do. That being said, if they announce it during market hours I will go max long FAS, XLF, UYG, C, BAC and any other financial I can get shares of. Short Squezzzzzzzzzzze.
Maybe the answer is to seperate the mark to market of assets from the reserves total. Only phyiscal assets would qualiy. It would be mark to market but not counted against reserves.