Bailout 4: Mark-to-model vs. mark-to-market

Different ways of accounting for an asset. Mark-to-model vs. mark-to-market.

Category:

Education

Tags:

• bailout
• fed
• treasury
• insolvency
• credit
• crunch
• accounting
• model
• mark
• market

[Brettwbeyer14]

but what could a bank get out of using mark to market. i mean in many instances mark to market is lower than what they actually have and they very often have to find extra funds from other sources as a result of having low share prices. and it's not that i don't believe banks rip people off. but in this case i think mark to market can cause a lot of problems for everybody including banks unfairly. and brokers can rip people off because of margins.

[khanacademy]

Banks don't benefit, investors and regulators do. Part of a bank's risk policies should be to avoid assets and leverage where the volatility in the market price of the asset can make the bank insolvent. I agree that market prices aren't perfect, but if you don't use them, you're essentially making up numbers to suit your own ends.

[Brettwbeyer14]

so why does donald trump claim that mark to marked is a cause of the crisis?

[khanacademy]

It's called blaming the messenger. A lot of people in finance would love to fudge reality as long as possible.

[rnams]

Sal,

Your style, clarity of speech and pictorial depiction is the best I have seen... Thx a ton !

[arushichopra]

i am an economics student from st. stephens' college, new delhi. i have been struggling to understand how the credit crisis and sub prime crisis came about for quite a while now. have been reading up on it... but the way you clarified the whole thing to me just in a matter of a few hours.. im highly impressed by you and am exceptionally thankful to you:)

[melpod77]

This stuff is super interesting! Only time i've ever stayed up late on a school night watching videos on the economy. Thank you Sal for making the world a smarter place!

[flyingbeagles]

Wow, this is actually interesting HAHA :P

[supriya55]

best rant ever! enjoyed it :) but u r right, this is instruction, not opinion.

[Mraaa4u]

Dude YOU ARE THE FREAKING BEST!!!!!!!!!!!!!!!! I cannot help but understand!! Can you please be my teacher XD and oh BTW I'm a science student but, damn I understood this perfectly ;)

[parklinkin52]

@Toshirozawa He does leave it out of the classroom... And anyway he has every right not to, how much did you pay for these videos again? that's right, nothing. He can do whatever the hell he wants.

[Toshirozawa]

I think what you're doing is wonderful and I've really learned a lot from your lectures, however, I think you should leave political ideologies and references out of the "classroom". It only deters from the content when you go off into pointing at the political spectrum. Just my opinion though.

[zwergnasezwergnase]

frankly, you should post a donation account. you are doing groundwork to the public of the sort which makes people like me, here in germany , reasess the worth of their english skills :)

thank you sir