Thread: Does Wall Street Have the Answer?

A Wall Street analyst was on Bloomberg a few minutes ago and here was his solution:

1. Eliminate "mark to market" accounting. He said it was unfair to value assets at their current value when it is possible they could eventually increase in value.

In other words, please let us hide our losses so that we can give ourselves big bonuses for poor business practices.

2. The Treasury shouldn't buy "toxic" assets when there is already a Fannie/Freddie facility that was set up with the purpose of buying "toxic" assets.

Really? Fannie/Freddie may have grown beyond their original scope, but they were not set up to buy "toxic assets" that they never originated in the first place.

3. Any bailout should be exclusive of any punitive measures. He said it wasn't fair to shareholders and bondholders.

I'm not sure how reducing executive compensation for doing a crappy job or greater transparency is bad for shareholders/bondholders, but then again Wall Street's mission has never been anything other then short term profits and the associated bonuses for principals.

This attitude reminds me of the old Family Circus comic with the "not me" ghost.

So, just how does a mortgage "appreciate" in value?

It's nothing but a contract to pay X dollars in principal pluy Y dollars in interest in Z years.

It has a known value.

Where's the mystery?

Maybe if Wall street didn't make up fictitious financial instrument to cover risk on loans the commercial banks shouldn't have been making, this "mark to market" issue wouldn't be relevant.

So forget about "mark to market", stop government guarantees of loans.

And if the shareholders bought stock in a company that they can't understand, why shouldn't they lose their shirts? Don't see any reason why I should have to pay taxes to cover their losses.

Originally Posted by Freedom for All

So, just how does a mortgage "appreciate" in value?

It's nothing but a contract to pay X dollars in principal pluy Y dollars in interest in Z years.

It has a known value.

Where's the mystery?

Maybe if Wall street didn't make up fictitious financial instrument to cover risk on loans the commercial banks shouldn't have been making, this "mark to market" issue wouldn't be relevant.

So forget about "mark to market", stop government guarantees of loans.

And if the shareholders bought stock in a company that they can't understand, why shouldn't they lose their shirts? Don't see any reason why I should have to pay taxes to cover their losses.

I'll agree with you that taxpayers shouldn't cover these losses. Derivatives where the same CDS dollar is used to ensure multiple risks is a quasi ponzi scheme. I'm against the bailout.

I just posted this because I was shocked at the audacity of the analyst. Even though many Wall Street analysts make similar type statements, they usually try dress it up their irresponsible greed.