tag:blogger.com,1999:blog-8804078212255195090.post6849905903056141559..comments2023-02-15T02:40:18.329-06:00Comments on Chicago-Kent Corporate Law Society Blog: What are the Toxic Assets Actually Worth?Chicago Kent Corporate Law Societyhttp://www.blogger.com/profile/04179543395499064356noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-8804078212255195090.post-64652042094309919182009-04-08T15:12:00.000-05:002009-04-08T15:12:00.000-05:00M2M accounting itself can provide a false value fo...M2M accounting itself can provide a false value for assets when there is a weak market for those assets. If I owned a mortgage, I could determine how much it is worth based on the future payments owed and the risk of default. However, M2M accounting would require me to enter the value others in the market would pay for the mortgage on my balance sheet. If the supply of mortgages greatly outweighs the demand, the M2M price will be much lower than the fair value of the mortgage and I am stuck writing down the price of the mortgage even though I don’t intend to sell it.Drew Kellyhttps://www.blogger.com/profile/09615693202683084202noreply@blogger.comtag:blogger.com,1999:blog-8804078212255195090.post-39280020554112250252009-04-07T10:35:00.000-05:002009-04-07T10:35:00.000-05:00The original financial crisis that we are trying t...The original financial crisis that we are trying to get out of was created by falsely valued assets. Creating more room to falsify the value of assets is not going to solve that problem.Jenhttps://www.blogger.com/profile/14797034942843039531noreply@blogger.comtag:blogger.com,1999:blog-8804078212255195090.post-2181345223678446932009-04-06T17:58:00.000-05:002009-04-06T17:58:00.000-05:00I suppose I see how this could be viewed as bailin...I suppose I see how this could be viewed as bailing out the banks indirectly. By giving the bank assets FDIC backing and providing financing that isn't available for other investments, these toxic assets become more valuable and the PPIF's will be willing to pay more for them. If the assets really aren't distressed as the research paper suggests, then this increase would allow banks to sell them at an inflated price and taxpayers take all the risk. If however the assets are distressed, the increase in value of these assets through the PPIF program would only be offsetting the effect of an illiquid market.Drew Kellyhttps://www.blogger.com/profile/09615693202683084202noreply@blogger.com