Regular people know the price of what they own - whatever the price is on the open market. Financial companies have been able to operate with reduced capital by engaging in the fraudulent practice of marking their assets to non-market prices.
The Financial Accounting Standards Board, which sets accounting standards, has agreed to continue to allow financial companies to mark their assets to prices that could not be realized in the free market. This allows the banks to show higher profits, to have less capital, and to continue to mislead investors while giving senior management oversized bonuses.
The panel, which sets U.S. accounting standards, today approved a change to its proposal that will allow banks to report some financial instruments on their balance sheets at amortized cost, as they currently do, rather than at fair value.
For Bear Stearns, the cheating was taken to greater levels. When will there be dozens and hundreds of criminal prosecutions?
Former Bear Stearns mortgage executives who now run mortgage divisions of Goldman Sachs, Bank of America, and Ally Financial have been accused of cheating and defrauding investors through the mortgage securities they created and sold while at Bear.
It is time to stop the looting and start the prosecuting.
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