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Happy 6th Birthday: The Day FASB Folded & "Mark-To-Fantasy" Was Born
Submitted by Jim Quinn via The Buring Platform blog,
The captured corporate MSM is celebrating the six year anniversary of when the stock market bottomed in March 2009. They will spin a false narrative of Bernanke, Obama and Geithner saving the world with TARP, QE, and the $800 billion Porkulus bill. What great heroes. Bernanke now gets $300,000 for a lunchtime speech at Bank of America gatherings. He is raking in north of $10 million per year now. He made $200,000 per year as the Fed Chairman. His wisdom must be on par with Jesus Christ to get $300,000 for a one hour speech. Bernanke’s Sermon on the Mount tour:

The millions he is getting paid by the Wall Street banks for speeches isn’t a payoff. Right?
Bernanke and Geithner stopped the market from falling in March 2009 by threatening the accounting geeks at the FASB and forcing them to allow fraudulent reporting by the insolvent Wall Street banks. The crisis ended – precisely – on March 16, 2009, when the Financial Accounting Standards Board abandoned FAS 157 “mark-to-market” accounting, in response to Congressional pressure from the House Committee on Financial Services and threats from Bernanke and Geithner on March 12, 2009. That change immediately removed the threat of widespread insolvency by making insolvency opaque. Mark to fantasy was born. Profits for everyone!!!
The fix was in. Every Wall Street bank was insolvent in March 2009. Citicorp and Bank of America were dead. There were hundreds of billions in worthless toxic mortgage securities, derivatives, auto loans, and credit card debt sitting on their books. FAS 157 required them to price those assets at what they could sell them for in the market. You remember free market capitalism? Something is worth whatever an independent party is willing to pay. The fat cats love free market capitalism when they are making billions. Not so much when they blow up the financial system and are faced with the consequences of THEIR actions.
The Wall Street banks were leveraged 30 to 1. Therefore, a 4% loss on their portfolio meant they were bankrupt. They were all bankrupt, and should have been liquidated in bankruptcy. That is why we have bankruptcy laws. But here’s the rub. Jamie Dimon, Lloyd Blankfein, the other Wall Street executives, billionaire investors, and many other very rich men would have borne the losses. That was unacceptable to the ruling oligarchs. They told their puppets – Bernanke & Geithner – to pressure the FASB into changing the accounting rule, so they could value their assets at whatever number they chose. The puppets did as they were told and the cowering mangy curs at the FASB reversed course.
All of a sudden, the Wall Street banks were miraculously solvent, making billions, paying themselves massive bonuses, rigging the markets, and enjoying the fruits of 0% interest money from Bennie and the inkjets. Ignore the blather you will see and hear about the saving the world bullshit. It was the pussy accountants at the FASB that “saved the bankers”. The people were fucked over and continue to be fucked over by the Fed and their Wall Street owners.
And after six years, if you applied mark to market accounting again, the Too Big To Trust Wall Street banks would still be insolvent. In addition, the Federal Reserve bought trillions in toxic assets, that sit on their balance sheet. They are currently leveraged 60 to 1. A 2% loss on their $4 trillion portfolio would make them insolvent.
Can you spell PONZI?

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Bernie and the Ink Jets. NICE!
I can't spell Ponzi.
I can spell fuck you, Burnyankme and Timmay and LLoyd and Dimon
Assholes need to be FUCKED!!!
Of words like 'ponzi' I have trouble with too
but of Shylocks & graft, we all call the Joo...
What No mention of that Snake Paulson. #1 in line to the rope pope
Wow, I guess I don't have enough money to get that deal...
This is the best clarification I have read of our mess of a system: http://www.debtcrash.report/entry/history-and-introduction
Starts slow but overall a great read
Great news post. People need to reminded of the pretenses that built this artificial recovery. It wasnt just QE, and more QE it was myriad of fraud and illusion.
what you're tryng to say is CRIME ---a myriad of crime---
this should be the heading of ZEROHEDGE....this is the sum of all problems!
In this large open space a market had been established, with the connivance, and much to the pecuniary emolument, of the priests. These let out the sacred area, of which they were the appointed guardians, to greedy and irreligious traders, who made a gain of others' piety.
That's how you know your in the club.
CPA's rock!
stateside
Long Unicorns.
Tons of em needed for quarterly and annual reports.
Now listen, citizen, don't try this accounting scam with your loan application or you go directly to jail !
mark to market was there for a reason. and, those losses havent gone away. they are still festering on balance sheets and will all come out when banks decide it is time to crash stocks and receive more taxpayer bailouts. they'll be taking all those 25-100 billion "one time charges" and earnings in the S&P 500 will drop over 50%. and yes, they will get bailed out again, because if they done, "THE WORLD WILL END".
I wish I could use the new rules when reporting my income to the IRS.
Foam the runway. Fuck You Geithner.
Accounting is now a fictional endeavour.
Without Accounting, the market is broken.
It has taken a long time to build Accounting. All that effort is wasted.
It wasn't just banks that got to live large off the accounting change. I remember back in 2009 when Select Comfort was essentially bankrupt. All of a sudden after one of the worst quarters they ever had, there was a miraculous turnaround and what was a quarter with multi million dollar losses became multi million dollar profit. The stock went on a tear, I think going up 300% within a month.
I got in arguments with people when they said their business must have improved. I said how the fuck could business turn around that fast. You are talking about less than three months to go from bankruptcy to million dollar profits. It can't happen. The business cycle takes longer than three months to play out.
Every publicly traded company could all of a sudden list inventory as an asset and other rule changes allowed inventory with open orders to be count as sold. Orders get cancelled all the time, but businesses could borrow against inventory sitting in warehouses by claiming there was orders placed for it. Using it as money in the bank.
Absolute madness.
Now, now... take a look at the success story called General Motors. The U.S. gubmint's bailouts saved all those jobs and helped the economy recover to levels I saw advertised today as "look for a 3 handle soon [on the U3 rate]".
Its like firemen setting fire to a house and showing up when its half burned down saving what's left and asking you to heap praise and money on them. Rapist blaming the victim, husband beating a wife and saying see what you made me do. That's what privileged psychopaths do, always have always will.
always wanted to witness drawn and quartered(do you tar and feather first?)....we could practice on Greenspan(easy he is old), Bernanke(small but tough), Geithner(wiry would be easy), Paulson(big and lanky and tough) and the best for last Yellen(bet she is tough old bird)! If everything works we could toss in Corzine(much slippery than the others) for laughs as well.
Amen!
It's amazing how effectively you can shore up an insolvent banking system if you're allowed to loot a country's capital base and destroy its middle class. Good job, Ben!
The fed prints money so it was actually free. Dot gov deficit spending shows up as inflation, mostly in foreign economies.
Enjoy your free while the reserve currency status lasts. After that ends, americans will learn how greece is getting along.
First Anderson disintegrated
Second mafiosi 'mark to MODEL' gets rammed through
FASB is a dirty whore for the banks
The end of accounting..
"In addition, the Federal Reserve bought trillions in toxic assets, that sit on their balance sheet. They are currently leveraged 60 to 1. A 2% loss on their $4 trillion portfolio would make them insolvent."
This reasoning is based upon the idea that accounting rules apply to central banks that create currency out of thin air. These accounting rules do not apply to such central banks. A central bank willing to create currency is incapable of becoming insolvent as long as the currency it creates has some market value. Leverage ratios of such central banks are meaningless.
In fairness to the author, this is part of a paragraph that starts "And after six years, if you applied mark to market accounting again,".
"if", in this sentence, is the operative qualifier of the author's statement, as I understand it.
Similarly, balance sheet accounting rules do not apply to central banks, especially central banks that are not subject to audit. The Fed can publish whatever it wants as its balance sheet. While the "official" Fed balance sheet showed $4 Trillion or so of money-printing, it was discovered a few years ago that it had issued an off-balance-sheet $16 Trillion.
Turning to Europe, If mark to market accounting were applied to the sovereign bonds from Greece and Ireland (and other PIIGS nations) now held by the Troika of the ECB, EC, and IMF, these bonds would be shown as having very low value, since the chances of these governments being able to pay off the principal amounts on these bonds is very low. Sovereign bonds from the PIIGS have market value only because of the implicit (and now more and more explicit) guarantee by the ECB that it will save bond buyers from losses.
One possible explanation of the willingness of bond buyers to purchase bonds with negative yield (by bidding up the prices over 100% of issue price) is that buyers expect the ECB to purchase these bonds at an even higher price. I have seen 124% stated as Draghi's purchase price target -a quick profit for bond speculators. Another possible explanation is that in the case of a credit/bank meltdown, holders of sovereign bonds expect a milder haircut on sovereign bond prices than the haircut given to bank deposits. Who knows?
In the meantime, the MSM is steadfastly ignoring the meltdown of the Austrian Hypo Alpe Adria "bad bank" Hate Asset Resolution, and its parallels to the 1931 Credit Anstalt crisis that resulted in the pan-Atlantic runs on banks.
Funny that these 'people' think they have gotten away with this blatant theft. Fact is, when this ponzi finally blows the claw-backs and repeals of the statute of limitations will bring justice to all who have been violated. It will not be pretty for the 'pretty boys'. This, it is written...