@maximilion1a

These changes include: Since 2009, the “temporary” repeal of FASB Rule 157 has allowed banks to value illiquid assets, such as real estate or mortgage-backed securities, at prices they deem more appropriate, rather than based on actual sales prices of similar assets in the recent past. This move was intended to keep banks solvent, as they had to write down billions of dollars of high-value assets on their books. The “temporary” repeal of Rule 157 not only increased bank profitability, it also made earnings look better than they actually were. Nonetheless, as long as Rule 157 was not reinstated, the “mark-to-myth” accounting rule continued to inflate earnings. Another recent distortion is the extensive use of off-balance sheet vehicles to mask corporate debt and leverage levels and boost earnings.

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