You will love this one.
Citigroup posted a $2.5 billion gain because of an accounting change adopted in 2007. Under the rule, companies are allowed to record any declines in the market value of their own debt as an unrealized gain. The rule reflects the possibility that a company could buy back its own debt at a discount, which under traditional accounting methods would result in a profit
So Citi uses literal "mark-to-market" in order to hype its earnings, but wants a not-so-much "mark-to-market" when looking at its loan portfolio.
I'll say it again: BANKRUPT this cancer called Citi. Sell off its parts. Bury the dead, before they bury US.
HT: MarketTicker
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1 comment:
I can understand using mark-to-market when there is a liquid asset, with a spot markt price (pretty much every commodity). But on non-liquid assets its just an invitation for fraud.
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