The accounting policies relating to losses seem quite ‘flexible’ and it looks like banks are taking advantage of these:
In a note dated July 24, John Murray and François Trausch from Pimco issued a warning regarding a significant amount of commercial real-estate loans maturing in the next two years, amounting to $1.5 trillion. “Lenders and borrowers will have to confront the consequences,” they wrote. If their analysis is accurate, it would suggest that the expected-loss model has not been performing as expected. Lenders retain significant flexibility in deferring the recognition of potential losses if they choose to do so.
There was a narrative being aired, 08-09, that the entire collapse was due to “intrusive, burdensome, big gummit, regulations” that required securities be marked to market. Proponents of this narrative apparently think that carrying paper on the books at a valuation that could be completely divorced from reality in an “arms length” market, is better?
Aw, that is so 20th century! We know the road to wealth is through financial speculation and manipulation. That is why the tax code encourages speculation and manipulation. If the speculators and manipulators are freed of accountability for their bad bets, they can grow the economy so much better, faster, and higher. Right?
/sarcasm
There are tons of articles still on line, blaming mark to market for the crash 15 years ago.
I have a system. If the word “bank” appears in the company name or on the website, then it’s toxic. If the word “Goldman” appears anywhere then it’s nuclear level toxic.
Dimon will eventually retire. Will the person who comes next have the same degree of teflon? iirc, Dimon hinted at retirement some months ago, and the stock immediately took a hit.
