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View Diary: Closely-Watched Court Decision Breaks Bad for Wall St. Has A Day of Reckoning Arrived? (154 comments)

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  •  Differing Accounting Standards (3+ / 0-)

    Three accounting standards exist for different companies based on approval from the Financial Accounting Standards Board. The first is obvious, they are the rules set down for virtually every small, medium, and large size business in the US. As if our current accounting and tax laws weren't abysmal enough in terms of protecting and enriching the 1%, there are these other monstrosities:

    Mark to Market
    This is what took down Enron. In effect, they looked at their customers and potential customers, decided how much they would make from them, and then were allowed to count that revenue on their books. When those sales didn't pan out, they had to take enormous adjustments which over time bankrupted the company.

    Mark to Model
    This was an outgrowth of the financial crisis. The banks were so far upside down in red ink, the only thing the federal government could do to rescue them was to allow them to value their assets for whatever they thought was appropriate. This prevented Congress from having to dole out tens of trillions of dollars, if not hundreds of trillions of dollars to right the ships of all the major banks. If you believe that the JPMorgans, Bank of Americas, and Wells Fargos are worth the  valuation of the common stock paper being passed around on Wall Street, this is the answer to that question. I wonder when the day of reckoning will occur for this.

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