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Is "Mark To Market" why they aren't lending?
It seems that because of Mark to Market, some of the bail out money given to banks has only helped re-balance their out of balance ratios. They still can't make new loans because that would cause their ratios to move out of balance again. The ratios I am speaking of are the deposits to loans ratios every bank is required to maintain. Those ratios are for banks like the old 28/36 ratios were in the old days for buying real estate. Less than 28/36 meant you were a buyer. 29/37 meant you were out of balance.
Simply put, "Mark To Market" is an accounting method that became law. It ended up affecting banks in ways that had not been carefully thought through. "Mark to Market" is a value accounting of assets based on the Market value at a given time. It does not allow for a cash flow value, or any other type of valuation. It is only a measure of value based on a point in time. So the problem with that is...?
It seems that the intent of the law wasto make everyone account for value the same way. What it didn't foresee was that when a big move ... more
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