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Mark to Model is Back

May 1st, 2008 by Stephen Roman

Remember all the criticism Enron took over doing just this (after getting permission from the SEC by the way)? Now the Bank of England is encouraging it:

While market-based estimates and the write-downs announced by firms may be unduly pessimistic, if such concerns persist there is a risk they could become self-fulfilling.

[...]

In that environment, firms may find that previous mark-to-market loss estimates have been overstated and some writebacks of reported losses may occur.

So instead of marking-to-market, you can just mark to anything you feel like…

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