Mo,
I did read the post that Frank made for you.
I wasn't even aware of the issue until you posted it. Thanks for
doing so - it's an interesting insight.
For those of you who don't know, this business stuff is Marueen
Nevin's area of journalistic expertise.
That's why I asked her the questions.
We're futunate to have folks like her on this board with expertise
in such an important current event (wish she was back on the radio).
--- In AsburyPark@yahoogroups.com, "radio881gal" <[EMAIL PROTECTED]>
wrote:
>
> To my knowledge these are actual trades that are reported in these
> indices, not assigned values based on aspects of the assets or
what
> an insurer would give you in an accident.
> These indices are a recent benefit to the market, since OTC
products
> have typically lacked transparency for this as well as other
reasons.
> Did you read the open letter from the auditors that Frank posted
for
> me yesterday?
> Maureen
>
> --- In AsburyPark@yahoogroups.com, "justifiedright"
> <justifiedright@> wrote:
> >
> > Are creditex and markit reliable? Do people routinely take
issue
> > with their amounts (like I do with blue book on cars?)
> >
> >
> >
> > --- In AsburyPark@yahoogroups.com, "radio881gal" <restore881FM@>
> > wrote:
> > >
> > > Tommy -
> > > Not sure if here you're referring to my post about the Wall
St.
> > > bailout.
> > > If you are, I'd want to say that there are indexes by Creditex
> and
> > > Markit, which contain traded prices on Credit Default Swaps
> (CDS)
> > > and Collaterolized Debt Obligations (CDOs). Paulson doesn't
want
> > > taxpayers paying the low prices the professional traders are
> > > currently paying for these. He's already said he wants
taxpayers
> > to
> > > buy these assets at future maturity rates. Wasn't that what
> Asbury
> > > Park residents wanted and didn't get in the redevelopment and
> > rehab
> > > zones?
> > > Maureen
> > >
> > > --- In AsburyPark@yahoogroups.com, "justifiedright"
> > > <justifiedright@> wrote:
> > > >
> > > > How do you use Mark to Market accounting when dealing with
an
> > asset
> > > > that is not widely traded? You have no data upon which to
set
> a
> > > > value.
> > > >
> > > > Also, when a firm goes under and is selling off their assets
at
> > a
> > > > fire sale, is it fair to use those sale numbers when someone
> > else
> > > is
> > > > valuing an asset under Mark to Market?
> > > >
> > > > Maybe the realty experts on the board can opine.
> > > >
> > > > If only we had someone on the board who regularly dealt with
> > burden
> > > > of valuing unique property? :-)
> > > >
> > > >
> > > >
> > > >
> > > >
> > > >
> > > >
> > > > --- In AsburyPark@yahoogroups.com, "asburycheech"
> > <asburycheech@>
> > > > wrote:
> > > > >
> > > > > Hi Folks,
> > > > > Maureen Nevin who is a member of this group is having
an
> > issue
> > > > with
> > > > > her internet connection, so she asked me to pass along the
> > > > following.
> > > > > She has a lot of good information on her asburyradio.com
> > > website,
> > > > but
> > > > > hoped those interested might like to read the following as
> > well:
> > > > >
> > > > > ---------- Forwarded message ----------
> > > > > From: Jay Hyde <jhyde@>
> > > > > Date: Tue, Sep 30, 2008 at 3:12 PM
> > > > > Subject: CAQ Urges Congress to Reject Proposals to Suspend
> > > > > Mark-to-Market (Fair Value) Accounting
> > > > > To: maureen@
> > > > >
> > > > >
> > > > > September 30, 2008
> > > > >
> > > > > Dear Member of Congress:
> > > > >
> > > > > The Center for Audit Quality (CAQ) believes that
proposals
> > > > advocating
> > > > > suspension of mark-to-market (or fair value) accounting
are
> > not
> > > in
> > > > the
> > > > > best interest of investors or the capital markets and
should
> > be
> > > > rejected.
> > > > >
> > > > > The principles of mark-to-market accounting are rooted in
the
> > > > > fundamental virtue of transparency and are central to
> informed
> > > > market
> > > > > decisions and efficient allocation of capital. In our
view,
> > > > investor
> > > > > confidence would be undermined by efforts designed to mask
> the
> > > > actual
> > > > > value of financial assets at a given point in time.
> > > > >
> > > > > It is important to underscore that mark-to-market
accounting
> > has
> > > > > contributed positively to revelations about the severity
of
> the
> > > > > economic crisis facing our country's credit markets and
> certain
> > > > > institutions, but it did not create the economic crisis.
> > > > >
> > > > > Recently, some have suggested that the Securities and
> Exchange
> > > > > Commission (Commission or SEC) or the Financial Accounting
> > > > Standards
> > > > > Board (FASB) should suspend the application of mark-to-
market
> > or
> > > > fair
> > > > > value accounting or somehow impose a moratorium on mark-to-
> > market
> > > > > requirements for certain financial institutions when
preparing
> > > > > financial statements to be used by investors.
> > > > >
> > > > > Although determining fair values for financial
instruments
> in
> > an
> > > > > illiquid market can be challenging, the best estimate of
the
> > > prices
> > > > > that would be received for such instruments in orderly
> > > transactions
> > > > > occurring at the measurement date remains the most relevant
> > > > > information for investors and policymakers. To lessen the
> > > > > uncertainties about the value of these securities, it is
> > critical
> > > > that
> > > > > investors continue to have the insight provided by the
> > > application
> > > > of
> > > > > mark-to-market accounting principles.
> > > > >
> > > > > Many of the current requirements stem from the Savings &
> Loan
> > > > crisis
> > > > > in the 1980s, when we learned that not knowing the real,
> > current
> > > > > values of financial instruments held by financial
> institutions
> > > can
> > > > be
> > > > > devastating when the bubble finally bursts and
institutions
> > are
> > > > forced
> > > > > to close their doors. The current requirements provide a
> > uniform
> > > > and
> > > > > consistent method to measure market values and provide
> > investors
> > > > > increased disclosures about those measurements. Suspending
> > > > > mark-to-market accounting would throw financial reporting
> back
> > to
> > > a
> > > > > time of less comparability, less consistency and less
> > > transparency.
> > > > >
> > > > > If there are concerns with the impact of asset valuations
on
> > > > capital
> > > > > requirements of financial institutions, regulators have
> > > > alternatives
> > > > > other than obscuring information relevant to investors.
> > > Regulators
> > > > may
> > > > > modify those requirements based on criteria other than
fair
> > value
> > > > > accounting measurements to the extent they deem
appropriate.
> > > > >
> > > > > Other capital markets participants also have expressed
> > concern
> > > > about
> > > > > the lack of transparency that would be created by a
> suspension
> > of
> > > > > mark-to-market accounting. The Council of Institutional
> > Investors,
> > > > > which represents 130 public, corporate and union pension
> funds
> > > with
> > > > > combined assets of more than $3 trillion, stated in a
recent
> > > > letter to
> > > > > the SEC that "[a]ny termination or suspension of fair
value
> > > > accounting
> > > > > will lessen transparency and investor confidence in the
> capital
> > > > > markets at a time when such confidence is critical to the
> > > > stability of
> > > > > our markets and the overall economy."
> > > > >
> > > > > Likewise, the CFA Institute, a global, professional
> > association
> > > of
> > > > > more than 97,000 investment professionals with offices
around
> > the
> > > > > world, recently wrote to both members of Congress and the
SEC
> > and
> > > > > noted that "[c]easing fair value reporting will only serve
to
> > > > > undermine the confidence of investors in our financial
> > > institutions
> > > > > and lead to a further crisis of confidence in our
government
> > and
> > > > the
> > > > > regulatory bodies overseeing those institutions."
> > > > >
> > > > > The proposed Emergency Economic Stabilization Act of 2008
> > > restates
> > > > > the authority of the Commission to suspend the application
of
> > > > > Statement of Financial Accounting Standards No. 157, Fair
> Value
> > > > > Measurements (FAS 157), and requires that the Commission
> > conduct a
> > > > > study on the effects of FAS 157 on financial institutions'
> > balance
> > > > > sheets, the impact of such accounting on bank failures in
> > 2008,
> > > the
> > > > > quality of financial information available to investors,
and
> > other
> > > > > matters, and report its findings to Congress within 90
days.
> > > While
> > > > a
> > > > > restatement of existing SEC authority and a study of mark-
to-
> > > market
> > > > > accounting and its effects are not necessarily harmful in
> > their
> > > own
> > > > > right, efforts to weaken the transparency provided by the
> > current
> > > > > standard should be avoided, especially in this time of
> > financial
> > > > > instability.
> > > > >
> > > > >
> > > > > The CAQ would be pleased to discuss with you any of the
> points
> > in
> > > > this
> > > > > letter at your convenience.
> > > > >
> > > > >
> > > > >
> > > > > Sincerely,
> > > > > Cynthia M. Fornelli
> > > > > Executive Director
> > > > > Center for Audit Quality
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > > Cc: Henry M. Paulson, Jr., Secretary, Department of
> > Treasury
> > > > > Ben S. Bernanke, Chairman, Federal Reserve
> > > > > Christopher Cox, Chairman, SEC
> > > > > Mark W. Olson, Chairman, PCAOB
> > > > > Robert H. Herz, Chairman, FASB
> > > > > All Members of Congress
> > > > >
> > > > > The CAQ is an autonomous public policy organization
serving
> > > > > investors, public company auditors and the capital markets
> and
> > is
> > > > > affiliated with the American Institute of CPAs. The CAQ's
> > mission
> > > > is
> > > > > to foster confidence in the audit process and to aid
> investors
> > > and
> > > > the
> > > > > markets by advancing constructive suggestions for change
> > rooted
> > > in
> > > > the
> > > > > profession's core values of integrity, objectivity,
honesty
> > and
> > > > trust.
> > > > > Based in Washington, D.C., the CAQ consists of
approximately
> > 800
> > > > > member firms that audit or are interested in auditing
public
> > > > companies.
> > > > >
> > > >
> > >
> >
>
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