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Stock Investing > The Peridot Capitalist
Nixing Mark-to-Market Accounting Is Not The Solution
Chad Brand | Tue, 09/30/2008 - 7:39pm |
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To me, this will just lend less credibility to bank balance sheets because investors will assume the banks are choosing artificially high prices for the assets they get to assign values to. Will sovereign wealth funds, private equity funds, and hedge funds all of the sudden start to offer new capital injections into firms that are doing this? I highly doubt it.
One reason why WaMu, Wachovia, and Lehman Brothers went under was because nobody trusted their balance sheets enough to invest in them. Marking up those toxic assets arbitrarily would hardly result in more confidence than there is today.
Full Disclosure: No position in any of the companies mentioned at the time of writing

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