Bay Area Real Estate Trends

Our economy is perilously perched on a crumbling foundation, over a gaping sink-hole of unserviceable debt. We’ve looked the other way for three years now, but maybe time is finally catching up with us.

The FASB had promised to come up with a single, standard definition for disclosing loan amounts. However, when doing so they missed setting the standard definition for “fair-value disclosures for financial instruments”. As these reports emerge, hopefully FASB will revisit this issue and ultimately close this loophole. Until then, the banks have no incentive to deal with the problem and will continue to kick the can down the road.

In October of 2008, the Emergency Economic Stabilization Act of 2008 was signed into law. Within this Act was the suspension of mark-to-market accounting by the Financial Accounting Standards Board. With this rule change, banks would no longer have to write down their assets if another bank sold similar assets at a lower price. A [...]