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If you decide you can't value an asset on a balance sheet you might still be able to estimate the exposure and require that that exposure be capitalized. The banks don't have the capital because the whole point is that they used off-balance-sheet vehicles to avoid having to capitalize in the first place.

What exactly is the problem here? Someone has to pronounce the dead banks, dead. And banks with more than $100bn in assets don't get to opt out of the audit of their balance sheets so at least the Federal Government will know what's on those balance sheets.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Feb 10th, 2009 at 02:06:50 PM EST
[ Parent ]
... Tarp 1.0 and Tarp 2.0 ... the Bush administration didn't want to know how bad the problem was, they just wanted to kick the can down the road.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Tue Feb 10th, 2009 at 02:43:05 PM EST
[ Parent ]
banks with more than $100bn in assets don't get to opt out of the audit of their balance sheets so at least the Federal Government will know what's on those balance sheets.
But possibly not what are the off-balance sheet liabilities?

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Feb 10th, 2009 at 05:54:46 PM EST
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