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Started By
Message
re: mark to market
Posted on 9/30/08 at 2:28 pm to Herb
Posted on 9/30/08 at 2:28 pm to Herb
quote:
I still don't understand why they can't be disassempled and rebundled. Simply remove the non performing mortgages.
Each mortgage was securitized in a package and sold.
Pieces of that package were then packaged with other packages; resecuritized and sold.
Repeat a thousand times.
Each security has a fraction of a fraction of a fraction of a loan. That is why it is comical when they talk about the government not foreclosing... they wont even know what they own and definately arent servicers....
the degree of securitization of securitizations is frightening.
0
Posted on 9/30/08 at 2:35 pm to Herb
According to Newt last night, this can be a very helpful thing.
The way I read it, corp were required to account for an asset at it's immediate value as opposed to some wort of weighted average value (last 3 years, etc).
Right now might = 0.
Weighted value might = 70% of the right now face value.
The way I read it, corp were required to account for an asset at it's immediate value as opposed to some wort of weighted average value (last 3 years, etc).
Right now might = 0.
Weighted value might = 70% of the right now face value.
Posted on 9/30/08 at 2:37 pm to Meauxjeaux
According to Newt last night, this can be a very helpful thing.
This is what we have come too. Can I do it for cash too? I had $100K last week, but now I have nothing... should I say $50K to be fair? Jesus people.
quote:
The way I read it, corp were required to account for an asset at it's immediate value as opposed to some wort of weighted average value (last 3 years, etc).
Right now might = 0.
Weighted value might = 70% of the right now face value.
This is what we have come too. Can I do it for cash too? I had $100K last week, but now I have nothing... should I say $50K to be fair? Jesus people.
Posted on 9/30/08 at 2:51 pm to Herb
quote:
They just announced that the rule was being changed.
where? Link?
MOTHERfrickER.
Posted on 9/30/08 at 2:54 pm to Colonel Hapablap
I know the FASB and SEC are releasing something this week, but did not hear it was imminent. Surprising they moved that fast (in relative accounting speed)
Posted on 9/30/08 at 2:56 pm to igoringa
It's like watching "how to irreperably frick your financial system for generations to come."
Unbelievable.
Unbelievable.
Posted on 9/30/08 at 3:13 pm to Colonel Hapablap
I saw it on CNBC. And, it just came back on. I think the SEC is changing fair value accounting standards. From what I heard, just because there is no market for a security, doesn't mean it has to be valued at zero. I think that makes sense. I like it.
Posted on 9/30/08 at 3:17 pm to Herb
quote:
just because there is no market for a security, doesn't mean it has to be valued at zero.
interesting. So if they are forcably liquidated, it won't matter that there's no market for it?
Posted on 9/30/08 at 3:20 pm to Colonel Hapablap
Well, they aren't valued at 0 right now, they're valued at what every one else is valuing them at.
ETA: Again, this does nothing to solve the long-term problem. I personally do not see this ending well.
ETA: Again, this does nothing to solve the long-term problem. I personally do not see this ending well.
This post was edited on 9/30/08 at 3:22 pm
Posted on 9/30/08 at 3:24 pm to kfizzle85
quote:
Well, they aren't valued at 0 right now, they're valued at what every one else is valuing them at.
right, they're marked at whatever some retarded model spit out at them. The same model that told them that the risk of default on that same MBS was a 1 in 10,000 year event. We see how that turned out.
quote:
I personally do not see this ending well.
agreed.
Posted on 9/30/08 at 3:27 pm to morgcl
Ask Jeff Skilling
Posted on 9/30/08 at 3:30 pm to Herb
quote:
I understand the concept, but not the mechanics. Is it true that under the mark to market rule, that a derivitave, a bundle of perhaps a thousand mortgages, will have to be marked down if one mortgage, is late, or defaults? That would seem to be an inaccurate means of accounting for the value of the asset. It would also be inaccurate to NOT count the impact of the one bad mortgage. I suppose the question is one of rating standards.
Each pool of mortgages was priced and sold based on the expectation that the loans would perform according to the credit ratings of the individual laons by the agency putting together the pool (typically FannieMae or FreddieMac). Investors bought the MBS expecting the returns of the pools to be near that promoted by the selling agency. Each loan in the pool that defaults lowers the return of the MBS to the investors. As the number of loans that default increase the interest income from the MBS decreases and so does its value. Since investors do not have access to the credit reports for the individual loans in the MBS they have no way to accurately do their own valuation of the MBS. Thus investors lose confidence in the MBS and become unwilling to risk mking additional investments in similar assets.
One of my concerns with the proposed bailout is that the government will be buying individual mortgages as a means of providing capital to lenders so they can make new loans. But I don't have a clue as to how such actions will impact the value of the MBS's as there will still be uncertainty as to the credit worthiness of the loans making up the pool. Obviously some of the risk will be removed, but not all of it. And I have no idea how anyone will quantify the reduction in risk sufficiently enough to have confidence to invest in MBS's.
Posted on 9/30/08 at 3:41 pm to Herb
quote:
From what I heard, just because there is no market for a security, doesn't mean it has to be valued at zero.
Can someone please show me where this is occurring... show me one mortgage backed that is marked to zero.
Posted on 9/30/08 at 3:44 pm to HTOWNTIGER1
quote:
Ask Jeff Skilling
:rimshot:
I used to work for El Paso. Mark to market in energy in the late 90's to 2001 was a house of cards.
Posted on 9/30/08 at 3:57 pm to Colonel Hapablap
quote:
again, the uncertainty is not about the market
I don't believe this.
Posted on 9/30/08 at 4:09 pm to igoringa
quote:
show me one mortgage backed that is marked to zero.
Jersey can.
Posted on 9/30/08 at 4:11 pm to Colonel Hapablap
lol touche
Posted on 9/30/08 at 4:33 pm to igoringa
seriously though, there are mezzanine tranches of subprime CDOs, along with ENTIRE subprime mezzanine CDO^2 that are worth 0. There are CDS sitting out there that probably have a negative market value. All of that crap needs to be eaten and then digested.
Posted on 9/30/08 at 6:03 pm to Colonel Hapablap
I am not saying it has a value, I am saying there are not too many public companies that have valued them as such... written them down substantially sure... but the post was the removal of MtM would let them record at above zero (with the inference that companies have these at zero now... not the case)
Posted on 9/30/08 at 9:02 pm to igoringa
quote:
I am not saying it has a value, I am saying there are not too many public companies that have valued them as such... written them down substantially sure... but the post was the removal of MtM would let them record at above zero (with the inference that companies have these at zero now... not the case)
oh I absolutely agree with that. Sorry, I misunderstood.
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