Quote of the Day: Fair Value Accounting
"In reality, however, fair value and mark-to-market have little to do with what is happening. It is companies' refusal to properly and clearly value their assets that's getting them in trouble...
"The Citigroup-Wachovia deal is the latest example of that. Citigroup agreed Tuesday to buy Wachovia's banking operations, the bulk of the company, for $2.16 billion plus the assumption of debt. That's a shockingly cheap price for a company with a book value - assets minus liabilities - of $75.1 billion...
"Which means either that Citi got an unprecedented bargain, or that Citi and the market didn't believe that the values Wachovia placed on its assets were realistic.">-Michael Rapoport, Dow Jones
>
Floyd Norris asks, "Wachovia went out with a book value of $75 billion. Citi paid $2 billion. Could it be that asset values are overstated, not understated?"
Gee, I dunno. Better obscure them as soon as possible . . .
>
Source:
Lying Bank Accounting
Floyd Norris
September 30, 2008, 1:37 pm
http://norris.blogs.nytimes.com/2008/09/30/lying-bank-accounting/
Wednesday, October 01, 2008 | 03:30 PM | Permalink
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Interesting article I note that like S and L's lax rules weren't the the investment banks were the real problem here. Repealing Glass Steagal? anyone. (sorry about spelling if i missed)
Posted by: GB | Oct 1, 2008 3:37:18 PM
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