Do shareholders feel elated by this rule change or does it make gaming the value of the companies harder? Banks have shown no ability to accurately assess their risk and now they’ve been given creative freedom to value their assets. How exactly are these guys smarter than the market in determining the value of these assets? “Fire sale” prices are the prices here, fellas – changing the rules just destroys confidence, it doesn’t restore those assets to face value.
You’re playing with investor perceptions when you change the standards. People buying stocks on this are desperate for an alternate reality where things go back to the way they were. That seems like a highly unlikely scenario as the only thing that changed was an accounting rule. The assets are still worth what the market will bear and no more.
The fix for the banks is in and it seems more like a break of trust than a fix. Probably time to buy gold again.