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I feel this is the crucial missing bit of information. The rules allow Wiley E Coyote to run over the cliff without looking down. When I was running a fund we'
by lordnacho 4y ago
I feel this is the crucial missing bit of information. The rules allow Wiley E Coyote to run over the cliff without looking down.
When I was running a fund we'd always think about the current mark to market. People would get in trouble for marking their books away from the market. How is it that is allowable to pretend things are worth more than they are?
- whatshisface 4y agoNobody was pretending, all of the information was public. You are allowed to read about a bank's investments and then decide to join their fund i.e. deposit above the FDIC threshold - unfortunately, a lot of small business owners did not see it that way.
- kragen 4y agowell, as it turned out, they were hedged with a 'fed put'
- kragen 4y agoi don't really know the history of the regulation, but it makes some sense to me that, if you buy a 5-year t-bill which will pay out some fixed amount 5 years from now, and you hold it until that maturity date, you shouldn't have to care what kind of crazy irrational things the bond markets are doing during those 5 years because you don't engage with those markets at all; they don't affect you in any way the t-bills they sold off the other day were not from the 'hold to maturity' bucket but from the other one, 'available for sale', so i'm not clear why the sale (as opposed to the presumably previous marking to market of those bonds) counted as a loss of 1.8 billion dollars
- lordnacho 4y agoBut in that situation your only risk is the thing that actually happened: you have to sell before you want at a bad price. Shouldn't the reporting rules be written so that people have to consider this?