Comments on: Tim Geithner’s Speech and Plan http://www.ritholtz.com/blog/2009/02/tim-geithner%e2%80%99s-speech-and-plan/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Fri, 19 Mar 2010 04:52:31 -0400 http://wordpress.org/?v=2.9.2 hourly 1 By: usphoenix http://www.ritholtz.com/blog/2009/02/tim-geithner%e2%80%99s-speech-and-plan/comment-page-1/#comment-145132 usphoenix Tue, 10 Feb 2009 23:49:06 +0000 http://www.ritholtz.com/blog/?p=18800#comment-145132 IMHO. This is as good as we can hope for. The market responded very negatively. Yeah. Or they are moving on to the next step. I am reminded of a T-shirt at a Beijing International Wireless Standards meeting. Technical Standard: A compromise everyone finds completely and totally unacceptable. OK, call me an optimist at this point. A ray of hope. IMHO. This is as good as we can hope for. The market responded very negatively. Yeah. Or they are moving on to the next step.

I am reminded of a T-shirt at a Beijing International Wireless Standards meeting. Technical Standard: A compromise everyone finds completely and totally unacceptable.

OK, call me an optimist at this point. A ray of hope.

]]> By: Joe P http://www.ritholtz.com/blog/2009/02/tim-geithner%e2%80%99s-speech-and-plan/comment-page-1/#comment-145120 Joe P Tue, 10 Feb 2009 22:38:37 +0000 http://www.ritholtz.com/blog/?p=18800#comment-145120 Not to pile on the issue of mark to marketing, but isn't the problem that the banks AREN'T doing it? Which is understandable, because I agree with Kotok. They'd be sunk. How many assets out there aren't toxic right now? There has been a colossal drop in asset values across the board, and the banks have loans against all of it. They just have to wait & see if they can hold on until inflation, and I think that's going to be a while. Not to pile on the issue of mark to marketing, but isn’t the problem that the banks AREN’T doing it? Which is understandable, because I agree with Kotok. They’d be sunk. How many assets out there aren’t toxic right now? There has been a colossal drop in asset values across the board, and the banks have loans against all of it. They just have to wait & see if they can hold on until inflation, and I think that’s going to be a while.

]]> By: Moss http://www.ritholtz.com/blog/2009/02/tim-geithner%e2%80%99s-speech-and-plan/comment-page-1/#comment-145113 Moss Tue, 10 Feb 2009 22:17:26 +0000 http://www.ritholtz.com/blog/?p=18800#comment-145113 To claim that markets were functional during the faux prosperity is ridiculous. More like fictional. The inflated marks allowed them to have less collateral. They were not AAA but were marked as such. All in the name of increasing EPS. To claim that markets were functional during the faux prosperity is ridiculous. More like fictional. The inflated marks allowed them to have less collateral. They were not AAA but were marked as such. All in the name of increasing EPS.

]]> By: Fred C Dobbs http://www.ritholtz.com/blog/2009/02/tim-geithner%e2%80%99s-speech-and-plan/comment-page-1/#comment-145105 Fred C Dobbs Tue, 10 Feb 2009 21:45:52 +0000 http://www.ritholtz.com/blog/?p=18800#comment-145105 Mark-to-market requires a bank to mark its assets to what the assets would sell for at arm's length in the market. The best evidence of an asset's actual value is what a comparable asset has recently sold for at arm's length in the market. Any other rule will necessarily result in a fictitious value. If the book carried value of an asset is not marked to market, but carried at an artificial higher amount, what assurances can Mr. Kotok give that the actual value of the asset in the market place will, if ever, rise in the market to the fictitious value carried on the bank's books? It is entirely possible that it will be many, many years, if ever, that real estate prices will rise to their all-time highs. Separately, I understand Banks only contribute 20+% to the nation's lending. What is the New Administration doing or planning to do to force the non-Bank lenders to lend, and jump-start the economy? If nothing, then we may be expecting the Banks to do more than are capable of. Separately, too while Banks, in contrast to Bank Holding Companies, are heavily-regulated, supervised, and examined by government, the rest of the lenders, those responsible for the other 80% of lending, do not seem to regulated, supervised and examined at all. Should not the lending play-field be leveled? Mark-to-market requires a bank to mark its assets to what the assets would sell for at arm’s length in the market. The best evidence of an asset’s actual value is what a comparable asset has recently sold for at arm’s length in the market. Any other rule will necessarily result in a fictitious value. If the book carried value of an asset is not marked to market, but carried at an artificial higher amount, what assurances can Mr. Kotok give that the actual value of the asset in the market place will, if ever, rise in the market to the fictitious value carried on the bank’s books? It is entirely possible that it will be many, many years, if ever, that real estate prices will rise to their all-time highs.

Separately, I understand Banks only contribute 20+% to the nation’s lending. What is the New Administration doing or planning to do to force the non-Bank lenders to lend, and jump-start the economy? If nothing, then we may be expecting the Banks to do more than are capable of.

Separately, too while Banks, in contrast to Bank Holding Companies, are heavily-regulated, supervised, and examined by government, the rest of the lenders, those responsible for the other 80% of lending, do not seem to regulated, supervised and examined at all. Should not the lending play-field be leveled?

]]> By: schoolsout http://www.ritholtz.com/blog/2009/02/tim-geithner%e2%80%99s-speech-and-plan/comment-page-1/#comment-145088 schoolsout Tue, 10 Feb 2009 20:52:21 +0000 http://www.ritholtz.com/blog/?p=18800#comment-145088 "He never mentioned the damage that has been done to the US financial system because the Financial Accounting Standards Board (FASB) has rigidly stayed with its rulemaking that caused 30 year assets to be marked to an estimated price with the variance charged against current earnings or added to current profits. Mark-to-market works when markets are functioning, have transparency and ample liquidity for transactions. Marking-to-market when the market is broken is impossible and results in the mess we now see." Do they expect to have it both ways? “He never mentioned the damage that has been done to the US financial system because the Financial Accounting Standards Board (FASB) has rigidly stayed with its rulemaking that caused 30 year assets to be marked to an estimated price with the variance charged against current earnings or added to current profits. Mark-to-market works when markets are functioning, have transparency and ample liquidity for transactions. Marking-to-market when the market is broken is impossible and results in the mess we now see.”

Do they expect to have it both ways?

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