Quote:
Originally Posted by HejiraNYC
Au contraire. On Wall Street, that's considered "revenue." Their balance sheets looked so good because they accounted for the full value of the (suicide) loans they made based on the assumption that they were going to be paid back in full. The banks didn't care whether or not the borrowers were actually going to pay back the loan; by the time any borrower could default, the loan would have already been collaterized into a "AAA" bond and resold to some greater fool at a hedge fund. The banks merely collected their huge commissions and moved on.
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I believe GAAP counts that as an asset. Rev. is when the payments are actually paid. Note - assets are based/valued on projected rev. Finally, the vast majority of loans are being paid back. I get that the numbers for foreclosures ae high and that is an awful thing, but over 90% are being paid
Here is what I thought was a good explantion of AAA ratings
http://seekingalpha.com/article/6700...al-than-others
Here is another
http://www.bankstocks.com/article.asp?type=1&id=9881669
Finally the bond market has been the cause of most bad times.