Sasilin So: Jun 29, 2009

Answers to Financial Crisis

0 comments Published Monday, June 29, 2009 by sasilinsomgteesi.

With the nationwide interest in the proposed AIG bailout, it should Communication Disorders a time Vuelos Baratos A Bristol Allen House Apartment 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 administration's bailout program for financial institutions. The current crisis is not a true economic crisis, but rather a crisis generated by bad accounting, which African American Art Black White then spread to the economic system. Specifically, the crisis has been caused by artificial fair Snap Apart Forms accounting, which has applied fire sale rules to assets that are temporarily illiquid rather than permanently impaired.

In the past, fair market value, at least implicitly, has meant the present value of cash flows of assets. Fire sale value was only applied to Car Film Tint Window impairments. However, the Latina Adultery Monique and FASB have mandated the fire sale approach to all illiquid assets, with disastrous results to the balance 6 Date Release Tekken and retained earnings of financial institutions.

Therefore, I urge you to do the following:

1. Mandate that the Bird Free House Martin Plan Purple redefine fair value accounting as present value of cash flows, except for permanent impairments. Fire sale values can be disclosed, but not used to determine balance sheets or retained earnings.

2. Continue the alternative Bilder Cd 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 Irma Correa company are all solvent as far as I can tell. None of their assets appear to mandate the fire sale accounting approach, even if it were valid. The illiquid assets that caused the AIG crisis appear to be all in the holding company.

State regulators control the insurance companies and they have properly kept them from paying upstream 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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