Interesting accounting

[jim-00-4.6]

From this article: Two Problems with the Stress Tests
(bold is mine)

Most banks can probably survive without further capital as long as they are not forced to mark their loan portfolios to market. If forced to mark loans to their current distressed prices, almost all banks would prove to have no equity left. With their loss reserves insufficient to absorb the losses, they will be essentially insolvent.

So, to clarify, as long as banks are allowed to lie about their balance sheets, their balance sheets look fine.

My confidence is restored, I think I'll buy some bank stocks.

 

[MarkP]

Yeah, saw that. My first thought was .......

What has changed?​

So if nothing has changed, still marking to model, why did the banks need billion in bailouts?

Was it because the music stopped?​

 

[knewsom]

What gets me is... even though they could still lie about their balance sheets - they STILL NEED 76 BILLION FUCKING DOLLARS. UGH.