Stagger Report

If you look back into the dark days of the crisis, everyone and their brother was condemning mark-to-market accounting. And the reason was that the bulk of the assets on the balance sheets of the “capital market banks” are trading assets and investments subject to marked-to-market accounting. So when things were going down in price, the lower asset prices had to be immediately reported.

Since March, however, mark-to-market accounting has worked like a flywheel for the capital market banks. Not only have better marks (higher prices) brought enormous earnings to those banks’ bottom lines, but because everyone was so focused on the financial condition of the banks, their turn propelled the whole market higher. And as the markets recovered, these same capital market banks then benefited from the underwriting fees associated with the huge surge in both equity and long-term debt issuance.

Read More HERE….

This entry was posted on Friday, November 20th, 2009 at 9:43 am and is filed under Business, Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.