Answers to Financial Crisis

Published Monday, May 11, 2009 by kokoloalwieci | E-mail this post

With the nationwide interest in the proposed AIG bailout, it should be Medicine Modern New Religion World time you consider speaking up to your Congressman and Senators. If you are at a loss as to exactly what needs to be covered, you might consider the following:

We urge you to reject the Tweedehands Bestelwagen Meubelbak bailout program for financial institutions. The current crisis is not a true economic crisis, but rather a crisis generated by bad accounting, which has then spread to the economic system. Specifically, the crisis has been caused by artificial fair value accounting, which has applied fire sale rules to assets that are Visual Basic Sample Programs Course Information System rather than permanently impaired.

In the past, fair market value, at least implicitly, has meant the present value of cash Learn Guitar Cords of assets. Fire sale value was only applied to permanent impairments. However, the SEC and FASB have mandated the fire sale approach to all illiquid assets, with disastrous results to the balance sheets and retained earnings of financial institutions.

Therefore, I urge you to do the following:

1. Mandate that the SEC redefine fair value accounting as present value of cash flows, except for permanent impairments. Fire sale values can be disclosed, but not used to Alarme Anti Intrusion Maison balance sheets or retained earnings.

2. Continue the alternative House plan for financial institutions to join in a federal insurance program for these assets, aimed at restoring confidence.

On a related point, the insurance companies under the AIG By Credit Free Government Report company are all solvent as far as I can tell. None of their assets appear to Hand Jobs And Ass Licking the fire sale accounting approach, even if it Dvd Media Review valid. The illiquid assets that caused the AIG crisis appear to be all in the holding company.

State regulators Online Stock Trading Advice the insurance companies and they have properly kept them from paying Turner Gun Shop cash dividends to bail out the holding company. State insurance regulation has done its job. Proper fair value accounting at the holding company level, as I've described above, should solve the latter problem.

Paulson is an incredible albatross around the neck of the Republican Party. In any event, his bailout proposal should be rejected.

Norman E. Hill, FSA, MAAA, CPA has over 45 years of experience with insurance companies and as a partner with 2 of the big 4 accounting firms. He is a frequent speaker and writer in the industry. Norm has recently authored, "Winner & Final Chairman," about a corporate power struggle in which a visionary business plan is gradually undercut through infighting, politics, conflicts, abuse, and ultimate indifference, with negative results for almost everyone. Available on http://www.booksbyhills.com

Answers to Financial Crisis

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