PR: Out of curiosity, where are you getting your numbers? You say that most of the banks have assets that are worth less than 10% more than their liabilities.
That sentence is a little confusing, but I’m reading that to mean that if liabilities are $100, then assets are $90. Is that right? If yes, that seems to be overbroad, in the sense that that sort of remarkable consistency, in terms of assets and liabilities, would be highly unlikely throughout the entire banking industry and, even if it were correct, it’s also highly simplistic from an accounting standpoint.
For many of these banks, especially the mega players like Citi, the issues aren’t so much balance sheet related, but off book, meaning off the balance sheet altogether. The off book exposures are also somewhat unknown at this point, as the toxicity of the assets hasn’t been fully ascertained. Much of the furor over the recent FASB guideline on Mark to Market accounting centered on proper valuation of those off book assets and whether a Mark to Model (previous valuation methodology) or Mark to Market methodology would be used.
Your comment piqued the accounting geek in me and prompted my question. I’d be curious as to where you got your information and the credibility of the source.
