Entries tagged "fair value"
Private equity firms may be feeling a bit like Al Capone nowadays (without all that criminal activity of course), as it won't be rivals or law enforcement that ensnare them, but their own sharp-penciled accountants. Thanks to the magic of mark-to-market accounting rules, LBO shops are preparing to give their limited partners the bad news of just how much those portfolio companies they bought in the boom years are worth during a credit crisis and recession. ...
Last week, Henry Paulson offered up a spirited defense of mark-to-market accounting, also known as "fair-value accounting." Paulson made several points. First, we can't just throw "fair-value" accounting out the window because of some illiquid markets in a crisis. Second, you can't run an investment bank without mark-to-market. Third, we need to recognize the losses and move on. Fourth (I'm making this one up), stop whining you damn crybabies. ...
