Level 2 and Level 3 Assets On The Rise


	Level 2 and Level 3 Assets On The Rise

Forbes Markets

11-20-2008 3:52 PM

528 views

tags:

capital, banking, financial bailout

Forbes Markets says:

With no TARP money for toxic assets, this was only to be expected

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/37bf7c70-df41-4e92-9560-628bb7351fff/2A38F4DF-B561-4FF3-BB14-C3459C40D215/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.financialweek.com/apps/pbcs.dll/article?AID=/20081116/REG/811149981" href="http://www.financialweek.com/apps/pbcs.dll/article?AID=/20081116/REG/811149981" style="font-size: 11px;">www.financialweek.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.financialweek.com/apps/pbcs.dll/article?AID=/20081116/REG/811149981"><DIV>
Roughly $300 billion in write-downs this year and what do financial institutions have to show for it? Ever-swelling coffers of still illiquid assets on their balance sheets. </DIV></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.financialweek.com/apps/pbcs.dll/article?AID=/20081116/REG/811149981"><DIV>The amount of those write-downs is as yet unknown, but many of the largest financial companies, including J.P. Morgan Chase, Citigroup and Morgan Stanley, have recently reported an increase in level three assets—the kind that do not trade and so cannot be marked to market but must be marked to management’s models. And if recent events have taught anything, it’s that models have a tendency to miss by wide margins.</DIV></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.financialweek.com/apps/pbcs.dll/article?AID=/20081116/REG/811149981"><DIV>More striking, perhaps, is the concurrent increase in level two assets—those that the Financial Accounting Standards Board defines as not actively traded but having “observable” inputs from the market prices of comparable securities. (Level one assets are those that are actively traded and easily valued.)</DIV></blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/2A38F4DF-B561-4FF3-BB14-C3459C40D215/blog/" title="blog or email this clip"><img src="http://content8.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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