An interesting website where the blogger has done research on the amount of "unreliably valued" assets (level 3 assets) several of the major banks in the USA have as a percentage of their equity.
http://www.rgemonitor.com/blog/roubini/224871/
worst ones are
Goldman Sachs, Level 3 assets are $72 billion, equity base is $39 billion. Their Level 3 assets to equity ratio is 185%.
Morgan Stanley: $88 billion in Level 3, equity base is $35 billion. Ratio: 251%
Level Three assets are valued according to model and are typically CDO's and other investments that have recently become pretty illiquid (and worth next to nothing).
So if they do decide to mark to market instead of model the banks are worthless. The top 5 investment banks have $350Bn at risk in the marked to model level 3 assets, which is a bit more than the amounts you have mentioned Michael.
The reason this is important at the moment is on November 15th this year, the FASB 157 regulatons come into place, and the banks will be forced to use market valuations, not the model valuations.
I think Bernanke has his hand on it, just as Greenspan did for 20 years. I liked Greenspan much more when he was a libertarian and favoured a gold standard.
http://www.rgemonitor.com/blog/roubini/224871/
worst ones are
Goldman Sachs, Level 3 assets are $72 billion, equity base is $39 billion. Their Level 3 assets to equity ratio is 185%.
Morgan Stanley: $88 billion in Level 3, equity base is $35 billion. Ratio: 251%
Level Three assets are valued according to model and are typically CDO's and other investments that have recently become pretty illiquid (and worth next to nothing).
So if they do decide to mark to market instead of model the banks are worthless. The top 5 investment banks have $350Bn at risk in the marked to model level 3 assets, which is a bit more than the amounts you have mentioned Michael.
The reason this is important at the moment is on November 15th this year, the FASB 157 regulatons come into place, and the banks will be forced to use market valuations, not the model valuations.
I think Bernanke has his hand on it, just as Greenspan did for 20 years. I liked Greenspan much more when he was a libertarian and favoured a gold standard.