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Mark to market regulations essentially force banks to price their assets according to how much they could fetch in the market if sold the next day.
Instead, they say, derivatives should be measured using something called fair value, an accounting term that means either the actual or estimated value the derivatives would fetch in the market.
But the company said it would have a capital deficit of $46.4 billion if it calculated its securities on a "fair value basis," or according to what they would fetch in the market.
Anyone who has ever tried to sell a used car (or a used anything, for that matter) knows there is often a wide gulf between what a buyer thinks the item is worth and what it can actually fetch in the market, assuming the seller can unload it at all.
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That Deutsch painting he bought for $3,940 in 1993 could easily fetch in the six figures on the market today, Mr. Piening said.
"We believe that the price is well below what the overall assets would fetch in the private market," Jeff Wlodarczak, an analyst at Wachovia Securities Inc., wrote in a research note to clients.
While Citigroup was fighting for survival over the weekend, its peers were pondering what some of the bloated bank's assets might fetch in the open market.
But revaluing the assets created as a result of those contracts (mostly refineries), at the prices they might fetch in current market conditions, it reckons they may be worth 89 billion reais less than their book value.The lower figure probably understates the write-down that will be needed, because the problem with dubious contracts may extend beyond Mr Costa's former fief.
Emphasize that you're not interested in the savviest asking price but what the home is actually likely to fetch on the market.
Critics of fair-value (or "mark-to-market") accounting, which requires assets to be held at market prices (or an approximation), complain that having to mark down assets to the value they would fetch in illiquid markets is likely to exacerbate downturns.
Because holding off will mean he won't need to spend the kind of money even a middling chip business could fetch in this overexuberant market.
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