April is the cruelest month…
On April 2nd the ghosts of Japan’s zombie banks will arrive on our shores…
On that day the nation’s weakest banks will be granted the right to determine the value of the toxic assets they hold on their books…
Our nations leaders, like the Japanese in their banking crisis, have determined that ossifying the current largest financial institutions is the path to national stability and recovery…
This action rests on a simple accounting rule… mark-to-market… a rule that determines how banks will value the assets they hold on their balance sheets… oh it’s all so complex and arcane… it’s best left to the leaders at the Treasury and Federal Reserve and the Wall Street economists… choices have been made… history is being written… why complain… the large banks have won… they have dominated the system… why would I have doubted that their influence was unlimited?
~~~~ ” The biggest US financial institutions reported a sharp increase to $610bn in so-called hard-to-value assets during the third quarter, raising concerns about the hidden dangers on balance sheets.
So-called level-three assets, classified as hard to value and hard to sell, rose 15.5 per cent from the second quarter, according to analysis by the Market, Credit and Risk Strategies group of Standard & Poor’s.
Level-three assets have risen all year for most banks as they have found it virtually impossible to sell mortgage-backed securities and collateralised debt obligations.
“A lot of banks are saying: ‘I am going to move securities to level-three assets because I have more control over, and confidence in, the model used for their valuations’,” said Gregg Berman, head of the risk management unit at Risk Metrics.
The study is based on regulatory filings by the biggest underwriters and traders of mortgage-backed securities and CDOs. These asset classes have plunged in value amid a wave of house price falls and foreclosures and are at the centre of the crisis…
Michael Thompson, managing director of MCRS, said he would be “surprised if we did not see writedowns of these level-three assets” in the fourth quarter.
Already, level-three assets are many times bigger than the market cap of the banks…
The FASB is set to vote on their proposal on April 2, after a 15-day public comment period.” ~~~~
Will these banks become permanent zombies?
Well… extraordinary efforts are being made to relieve banks of these toxic assets through taxpayer subsidization… bank’s debt was guaranteed by the FDIC to allow them lower wholesale funding costs…rules are being revised to lend support to the corrupt balance sheets of these banks…
One imagines that the bright people in the new administration have looked at their ambitious agenda to improve our country and bartered zombie banks for financial stability… they reason that this gives them a foundation for the reformation of health care and other social goods… maybe so…
But the heart of our democratic system is still economic exchange… and we’ve left in place the money changers who brought us over the brink… tell them to restrain themselves now… pray that the lesson was painful enough even for them to understand it’s weight… tell the moneychangers that endless “stimulus” depletes our nation of it’s strength…
No… I fear that the old song will keep on playing… consume… consume… consume… but the people have wearied of that song… it’s old now… and it no longer lifts our spirits…
Konichiwa… April is the cruelest month…
Post a Comment