New-Old meme: FAS 157 is ruining the financial industry. Barry Ritholtz knocks this point of view around, as reported in the New York Times:
Some blame the rapacious lenders. Others point to the deadbeat borrowers. But Stephen A. Schwarzman sees another set of culprits behind all the pain in the financial industry: the accountants.
You see, the magic of securitization during the boom was that it created obscure instruments like CDOs that were "worth" more than the underlying collateral (absurd mortgage loans). Now that the magic of securitization during the bust is that it has left behind obscure instruments--those pesky CDOs--that may well be "worth" less than the underlying collateral, if you can imagine that, foul is cried:
See full Article.
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