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The end of an era. No more Wall St investment banks
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[QUOTE]Originally posted by glassman: [QB] one of the things that nobody talks about much was the new accounting rules they put in place last Nov... it required everybody to "mark to market" on level three assets.. this was probably more devastating than the mortgage notes not giving the expected returns becuase all of these basturds were basically lying (yes Mach fraud, but sortof legal fraud) about the values of their holding... [i] Nov 3, 2007 Page 1 of 2 THE BEAR'S LAIR Level 3 storm about to hit Wall Street By Martin Hutchinson There's a mystery on Wall Street. Merrill Lynch wrote off $8.4 billion in its subprime mortgage business, a figure revised up from $4.9 billion, yet Goldman Sachs reported an excellent quarter and didn't feel the need for any write-offs. The real secret of the difference is likely to be in the details of their accounting, and in particular in the murky world, shortly to be revealed, of their "Level 3" asset portfolios. Both Merrill and Goldman have Harvard chairmen - Merrill's Stan O'Neal from Harvard Business School and Goldman's Lloyd Blankfein from Harvard College and Harvard Law School. Thus it's pretty unlikely their approaches to business are significantly different - or is a Harvard MBA really worth minus $8.4 billion compared with a law degree? (The special case of George W Bush may be disregarded in answering that question.) [/i] http://www.atimes.com/atimes/Global_Economy/IK03Dj03.html looking further back? you can see how the rule changes can have very big "splashes" [b]New Accounting Rules Could Roil The Markets November 28, 2001 | By Rick Wayman FAS 142 is the accounting rule introduced in 2001 that changed how companies treat goodwill. To avoid making bad investment decisions, investors must be aware of this rule's impact on reported earnings. This accounting rule change impacts earnings in two major ways, both of which could give uninformed investors a wrong signal:[/b] this rule change had very unexpected results... my DD at the time ( just last fall not in '01) pointed to Merryl as the least exposed to the risk associated with this new rule... when they got bought? i knew we were in even more trouble than i had imagined... but like i said? i never imagined just how much these folks were LYING. [/QB][/QUOTE]
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