Comments on: 12th Street Capital Reviews FASB 166 and 167 and Tells Us Why Wall Street Will Need More Capital

By: Don

Don — Sat, 14 Nov 2009 19:49:37 +0000

There is a rumor that FASB 166 and 167 have been pushed back until 2011. Is this true or are they still going forward with the new accounting rules? Personally I believe we should follow through with these rules. It is time for the banks to tell the truth on what they have on their balance sheets. It is a pure lie if they continue to delay any effort to create transparency. Americans must demand these banks to tell the truth!!

By: Larry Doyle

Larry Doyle — Wed, 04 Nov 2009 23:42:13 +0000

Fiscal…the capital is actually determined by the face value (amount) of the asset and what risk weighting is assigned to it. The lower the risk weighting the less capital needs to be allocated and vice versa.

By: fiscalliberal

fiscalliberal — Wed, 04 Nov 2009 23:27:19 +0000

Could it be that when they bring the asssets back on the books, they can mark them to model which gives them a lot of flexibility to minimize capital variations. The only problem with that is one does not have a true picture of status. However I suspect smart investors know all that stuff.

The real problem comes when they want to sell them or FASB goes back to Mark to Market. As we used to say in Wisconsin, the cheese will get binding then.

Generally speaking, after Enron, my quesions increase dramatically when I hear the terms off book. Life should get tough when you get caught with financial shenanigans.

By: Larry Doyle

Larry Doyle — Wed, 04 Nov 2009 21:55:47 +0000

Petricone456….happy to help. The crowd at 12th Street deserves the credit.

By: Petricone456

Petricone456 — Wed, 04 Nov 2009 21:17:28 +0000

Thanks for this post! After checking a few large-cap bank models from the sell-side it doesn’t look like everyone has this baked into the cake… they’ve run a few loss assumptions, but have said nothing re: capital… Point in case, Citigroup’s $2tn balance sheet would grow by about 40% if forced to bring all that stuff back on! Again, thanks for the post!