Mark to market fraudSubmitted by sdczen on Fri, 02/11/2011 - 13:32
Here is an interesting article on the mark to market rule change and how it allows banks to completely mask their worthless holdings and use it as collateral to borrow money from the FED at almost 0% interest.
The MTM (Mark-to-Market) rule forced banks to continually adjust their books to allow their assets/liabilities to be adjusted to at current "fair market" price. Simply stated, if the banks had an asset that was worth $10Billion in 2007 and worth $4Billion in 2008 they would have to "Mark" the price adjustment into their books as "Current Market Value" This also works in reverse, if that $10Billion asset tripled in value then the banks got to reap the newly adjusted $30Billion price tag. Obviously when the market was crashing, this rule was devastating to most of the banks. Much like the homeowners that purchased their homes at the height of the bubble, just to watch the value plummet into the toilet overnight.
Read more here: http://www.twatm.com/index.php/economics/item/8-mark-to-mark...