1、本科毕业论文（设计）外文翻译外文出处HARVARDBUSINESSREVIEW外文作者ROBERTCPOZEN原文ISITFAIRTOBLAMEFAIRVALUEACCOUNTINGFORTHEFINANCIALCRISISWHATWASTHEPRIMARYCAUSEOFTHECURRENTFINANCIALCRISISSUBPRIMEMORTGAGES,CREDITDEFAULTSWAPS,OREXCESSIVEDEBTNONEOFTHOSE,SAYSSTEVEFORBES,CHAIRMANOFFORBESMEDIAANDSOMETIMEPOLITICALCANDIDATEINHISVIEW
2、,MARKTOMARKETACCOUNTINGWAS“THEPRINCIPALREASON”THATTHEUSFINANCIALSYSTEMMELTEDDOWNIN2008DOACCOUNTINGRULESACTUALLYPACKSUCHAWALLOPFORREADERSNOTSCHOOLEDINFINANCIALJARGON,MARKINGTOMARKETISTHEPRACTICEOFREVALUINGANASSETQUARTERLYACCORDINGTOTHEPRICEITWOULDFETCHIFSOLDONTHEOPENMARKET,REGARDLESSOFWHATWASACTUALLY
3、PAIDFORITBECAUSETHEPRACTICEALLOWSFORNOOUTDATEDORWISHFULTHINKINGVALUATIONS,ITISAKEYCOMPONENTOFWHATISKNOWNASFAIRVALUEACCOUNTINGANDITISATTHECENTEROFTHEHOTTESTACCOUNTINGDEBATEINDECADESMANYBANKERSPILLORIEDFAIRVALUEACCOUNTINGWHENTHESUDDENSEIZEUPOFCREDITMARKETSINTHEFALLOF2008DROVETHECLEARINGPRICESFORKEYASS
4、ETSHELDBYTHEIRINSTITUTIONSTOUNPRECEDENTEDLOWSECONOMISTBRIANWESBURYREPRESENTEDTHEVIEWSOFTHATGROUPWHENHEDECLARED,“MARKTOMARKETACCOUNTINGRULESHAVETURNEDALARGEPROBLEMINTOAHUMONGOUSONEAVASTMAJORITYOFMORTGAGES,CORPORATEBONDS,ANDSTRUCTUREDDEBTSARESTILLPERFORMINGBUTBECAUSETHEMARKETISFROZEN,THEPRICESOFTHESEA
5、SSETSHAVEFALLENBELOWTHEIRTRUEVALUE”WESBURYANDFORBESARGUETHATMARKINGTOMARKETPUSHEDMANYBANKSTOWARDINSOLVENCYANDFORCEDTHEMTOUNLOADASSETSATFIRESALEPRICES,WHICHTHENCAUSEDVALUESTOFALLEVENFURTHERPERSUADEDBYSUCHARGUMENTS,SOMEPOLITICIANSINTHEUNITEDSTATESANDEUROPEHAVECALLEDFORTHE2SUSPENSIONOFFAIRVALUEACCOUNTI
6、NGINFAVOROFHISTORICALCOSTACCOUNTING,INWHICHASSETSAREGENERALLYVALUEDATORIGINALCOSTORPURCHASEPRICEYETMARKTOMARKETACCOUNTINGCONTINUESTOHAVEITSPROPONENTS,WHOAREEQUALLYADAMANTLISAKOONCE,ANACCOUNTINGPROFESSORATTHEUNIVERSITYOFTEXAS,WROTEINTEXASMAGAZINE“THISISSIMPLYACASEOFBLAMINGTHEMESSENGERFAIRVALUEACCOUNT
7、INGISNOTTHECAUSEOFTHECURRENTCRISISRATHER,ITCOMMUNICATEDTHEEFFECTSOFSUCHBADDECISIONSASGRANTINGSUBPRIMELOANSANDWRITINGCREDITDEFAULTSWAPSTHEALTERNATIVE,KEEPINGTHOSELOANSONTHEBOOKSATTHEIRORIGINALAMOUNTS,ISAKINTOIGNORINGREALITY”SHAREHOLDERGROUPSHAVEGONEEVENFURTHER,ASSERTINGTHATMARKINGTOMARKETISALLTHEMORE
8、NECESSARYINTODAYSENVIRONMENTTHEINVESTMENTADVISORYGROUPOFTHEFINANCIALACCOUNTINGSTANDARDSBOARDFASBSTRESSEDTHAT“ITISESPECIALLYCRITICALTHATFAIRVALUEINFORMATIONBEAVAILABLETOCAPITALPROVIDERSANDOTHERUSERSOFFINANCIALSTATEMENTSINPERIODSOFMARKETTURMOILACCOMPANIEDBYLIQUIDITYCRUNCHES”INTHISVIEW,IFBANKSDIDNOTMAR
9、KTHEIRBONDSTOMARKET,INVESTORSWOULDBEVERYUNCERTAINABOUTASSETVALUESANDTHEREFORERELUCTANTTOHELPRECAPITALIZETROUBLEDINSTITUTIONSWHICHCAMPHASTHERIGHTANSWERPERHAPSNEITHERWEDONOTWANTBANKSTOBECOMEINSOLVENTBECAUSEOFSHORTTERMDECLINESINTHEPRICESOFMORTGAGERELATEDSECURITIESNORDOWEWANTTOHIDEBANKLOSSESFROMINVESTOR
10、SANDDELAYTHECLEANUPOFTOXICASSETSASHAPPENEDINJAPANINTHEDECADEAFTER1990TOMEETTHELEGITIMATENEEDSOFBOTHBANKERSANDINVESTORS,REGULATORYOFFICIALSSHOULDADOPTNEWMULTIDIMENSIONALAPPROACHESTOFINANCIALREPORTINGBEFOREWECANBEGINTOIMPLEMENTSENSIBLEREFORMS,THOUGH,WEMUSTFIRSTCLEARUPSOMEMISPERCEPTIONSABOUTACCOUNTINGM
11、ETHODSCRITICSHAVEOFTENLAMBASTEDTHEREQUIREMENTTOWRITEDOWNIMPAIREDASSETSTOTHEIRFAIRVALUE,BUTINREALITYIMPAIRMENTISAMOREIMPORTANTCONCEPTFORHISTORICALCOSTACCOUNTINGTHANFORFAIRVALUEACCOUNTINGMANYJOURNALISTSHAVEINCORRECTLYASSUMEDTHATMOSTASSETSOFBANKSAREREPORTEDATFAIRMARKETVALUE,RATHERTHANATHISTORICALCOSTSI
12、MILARLY,MANYPOLITICIANSHAVEASSUMEDTHATMOSTILLIQUIDASSETSMUSTBEVALUEDATMARKETPRICES,DESPITESEVERALFASBRULINGSTOTHECONTRARYEACHOFTHESEMYTHSBEARSCLOSE3EXAMINATION1HISTORICALCOSTACCOUNTINGHASNOCONNECTIONTOCURRENTMARKETVALUEFAIRVALUEPROPONENTSARGUETHATHISTORICALCOSTSOFASSETSONACOMPANYSBALANCESHEETOFTENBE
13、ARLITTLERELATIONTOTHEIRCURRENTVALUEUNDERHISTORICALCOSTACCOUNTINGRULES,MOSTASSETSARECARRIEDATTHEIRPURCHASEPRICEORORIGINALVALUE,WITHMINORADJUSTMENTSFORDEPRECIATIONOVERTHEIRLIFEASINTHECASEOFBUILDINGSORFORAPPRECIATIONUNTILMATURITYASINTHECASEOFABONDBOUGHTATADISCOUNTTOPARABUILDINGOWNEDBYACOMPANYFORDECADES
14、,THEREFORE,ISLIKELYTOAPPEARONTHEBOOKSATAMUCHLOWERVALUETHANITWOULDACTUALLYCOMMANDINTODAYSMARKETHOWEVER,EVENUNDERHISTORICALACCOUNTING,CURRENTMARKETVALUESAREFACTOREDINTOFINANCIALSTATEMENTSUSREGULATORSREQUIREALLPUBLICLYTRADEDCOMPANIESTOSCRUTINIZETHEIRASSETSCAREFULLYEACHQUARTERANDASCERTAINWHETHERTHEYHAVE
15、BEENPERMANENTLYIMPAIREDTHATIS,WHETHERTHEIRMARKETVALUEISLIKELYTOREMAINMATERIALLYBELOWTHEIRHISTORICALCOSTFORANEXTENDEDPERIODIFTHEIMPAIRMENTISNOTJUSTTEMPORARY,THECOMPANYMUSTWRITETHEASSETDOWNTOITSCURRENTMARKETVALUEONITSBALANCESHEETANDRECORDTHERESULTINGLOSSONITSINCOMESTATEMENTPERMANENTIMPAIRMENTSOFASSETS
16、HAPPENFREQUENTLYUNDERHISTORICALCOSTACCOUNTINGIN2008ALONE,SANDLERONEILLTHEYWILLBEWRITTENDOWNONLYIFPERMANENTLYIMPAIREDBYCONTRAST,ALLTRADEDASSETSAREMARKEDTOMARKETEACHQUARTERANYDECREASEINTHEFAIRMARKETVALUEOFABANKSTRADEDASSETSREDUCESTHEEQUITYONITSBALANCESHEETANDFLOWSTHROUGHITSINCOMESTATEMENTASALOSSASASIM
17、PLEILLUSTRATION,SUPPOSEABANKBUYSABONDFOR1MILLION,ANDTHEBONDSMARKETPRICEDECLINESTO900,000ATTHEENDOFTHENEXTQUARTERALTHOUGHTHEBANKDOESNOTSELLTHEBOND,THELEFTSIDEOFITSBALANCESHEETWILLSHOWA100,000DECREASEINASSETS,ANDTHERIGHTSIDEWILLSHOWACORRESPONDING100,000DECREASEINEQUITYBEFOREANYTAXEFFECTSTHISDECREASEWI
18、LLALSOFLOWTHROUGHTHEBANKSINCOMESTATEMENTANDBEREPORTEDASA100,000PRETAXQUARTERLYLOSSTHEACCOUNTINGTREATMENTOFTHETHIRDASSETCATEGORYASSETSAVAILABLEFORSALEISMORECOMPLEXALTHOUGHDEBTSECURITIESINTHISCATEGORYAREMARKEDTOMARKETEACHQUARTER,ANYUNREALIZEDGAINSORLOSSESONTHEMAREREFLECTEDINASPECIALACCOUNTONABANKSINCO
19、MESTATEMENTWHEREITISCALLEDOTHERCOMPREHENSIVEINCOME,OROCIANDAGGREGATEDOVERTIMEONITSBALANCESHEETWHEREITISCALLEDACCUMULATEDOCIBECAUSEOFTHISSPECIALTREATMENT,UNREALIZEDLOSSESONTHEMDONOTREDUCETHEBANKSNETINCOMEORITSREGULATORYCAPITALHELDFORSALELOANS,MEANWHILE,MUSTBEBOOKED5ATTHELOWEROFCOSTORMARKETVALUE,WITHA
20、NYDECLINEREPORTEDASALOSSONTHEINCOMESTATEMENTBUTTHEYMAKEUPAVERYSMALLPERCENTAGEOFTHISCATEGORYTHESECFOUNDINITSSTUDYTHATNEARLYATHIRDOFTHOSE31OFBANKASSETSMARKEDTOMARKETWEREAVAILABLEFORSALEDEBTSECURITIESACCORDINGLY,THEPERCENTAGEOFASSETSFORWHICHMARKINGTOMARKETAFFECTEDTHEBANKSREGULATORYCAPITALORINCOMEWASJUS
21、T22IN2008FARFROMAMAJORITY3ASSETSMUSTBEVALUEDATCURRENTMARKETPRICESEVENIFTHEMARKETFORTHEMISILLIQUIDFAIRVALUEACCOUNTINGWOULDBESTRAIGHTFORWARDIFALLFINANCIALASSETSWEREWHATFASBDEEMSLEVEL1HIGHLYLIQUIDANDEASYTOVALUEATDIRECTMARKETPRICESSINCETHEYDONOTALWAYSHAVETHESECHARACTERISTICS,HOWEVER,FASBCREATEDASTANDARD
22、,FAS157,WHICHALLOWSFORTWOOTHERLEVELSWHENEVERPOSSIBLE,THESTANDARDSTATES,ASSETSSHOULDBEVALUEDACCORDINGTOTHELEVEL1METHODONTHEBASISOFOBSERVABLEMARKETPRICESBUTTHESTANDARDRECOGNIZESTHATMARKETPRICESARENOTALWAYSAVAILABLE,INWHICHCASEITALLOWSFINANCIALEXECUTIVESTOVALUEASSETSBYUSINGOBSERVABLEMARKETINPUTS,THELEV
23、EL2METHODTHESEINPUTSCOULDINCLUDE,FORINSTANCE,TRADINGPRICESANDDISCOUNTSFORSECURITIESSIMILARORRELATEDTOTHEONESBEINGVALUEDWHENNOTEVENSUCHINPUTSAREAVAILABLE,ASWITH,SAY,ANINVESTMENTINAPRIVATEEQUITYFUND,THEASSETSHOULDBEVALUEDUNDERLEVEL3WHENTRADINGASSETSARECLASSIFIEDASLEVEL3,BECAUSEOFILLIQUIDMARKETSORFOROT
24、HERREASONS,FINANCIALEXECUTIVESAREALLOWEDTOVALUETHEMBY“MARKINGTOMODEL”INSTEADOFMARKINGTOMARKETINMARKINGASSETSTOMODEL,EXECUTIVESMAYUSETHEIROWNREASONABLEASSUMPTIONSTOESTIMATEFAIRMARKETVALUEWHENTHEDEBTMARKETSFROZEDURINGTHEFALLOF2008,FASBRELEASEDASTAFFPAPERCLARIFYINGTHEAPPLICATIONOFFAIRVALUEACCOUNTINGTOI
25、LLIQUIDMARKETSTHATPAPEREMPHASIZEDTHEFLEXIBILITYOFSTANDARD157ANDMADECOMPANIESAWARETHATTHEYCOULDRECLASSIFYTRADINGASSETSFROMLEVEL2TOLEVEL3ASMARKETSBECAMEMOREILLIQUIDFASBALSOSTRESSEDTHATCOMPANIESDIDNOTHAVETOUSEPRICESFROMFORCEDORDISTRESSEDSALESTOVALUEILLIQUIDASSETS6HOWEVER,THESERULINGSDIDNOTPROVIDEENOUGH
26、COMFORTFORBANKERSWATCHINGTHEMARKETVALUEOFTHEIRTOXICASSETSPLUMMETTHEYCOMPLAINEDLOUDLYTOTHEIRELECTEDREPRESENTATIVES,WHOTHREATENEDTOLEGISLATEACCOUNTINGSTANDARDSUNLESSFASBPROVIDEDMORERELIEFASARESULT,INAPRIL2009FASBQUICKLYPROPOSEDANDADOPTEDANEWRULE,WHICHDETAILEDCRITERIAFORDETERMININGWHENAMARKETISILLIQUID
27、ENOUGHTOQUALIFYFORMARKTOMODELVALUATIONTHERULEWASDESIGNEDTOALLOWMORESECURITIESTOBEVALUEDBYBANKMODELSINSTEADOFBYMARKETINDICATORSONTHESAMEDAY,FASBISSUEDYETANOTHERRULEONHOWTOACCOUNTFORSECURITIESWHENTHEYWEREPERMANENTLYIMPAIREDTHERULESAIDTHATONLYTHECREDITLOSSPORTIONOFSUCHIMPAIRMENTSWOULDAFFECTABANKSINCOME
28、ANDREGULATORYCAPITAL,WITHTHERESTSUCHASUNREALIZEDLOSSESRELATEDTOILLIQUIDITYGOINGINTOTHESPECIALACCOUNTFOROTHERCOMPREHENSIVEINCOMETHOSETWORETROACTIVERULINGSMADEITPOSSIBLEFORLARGEUSBANKSTOSIGNIFICANTLYREDUCETHESIZEOFWRITEDOWNSTHEYTOOKONASSETSINTHEFIRSTQUARTEROF2009THERULINGSIMPROVEDTHESHORTTERMFINANCIAL
29、PICTUREOFTHESEBANKS,ALTHOUGHTHEYALSOLEDBANKEXECUTIVESTORESISTSALESOFTOXICASSETSATWHATINVESTORSBELIEVEDTOBEREASONABLEPRICESTHREERECOMMENDATIONSFORREALISTICREPORTINGONCEWEGETBEYONDTHEMYTHMAKINGANDARMWAVING,ITBECOMESCLEARTHATHISTORICALCOSTANDFAIRVALUEACCOUNTINGAREMUCHCLOSERTOEACHOTHERTHANPEOPLETHINKNEV
30、ERTHELESS,THEDIFFERENCESBETWEENTHETWOFORMSOFACCOUNTINGMAYBESIGNIFICANTFORAPARTICULARBANKONASPECIFICREPORTINGDATEINTHESESITUATIONS,THEBANKEXECUTIVESUNDERSTANDABLEDESIRETOPRESENTASSETSINTHEBESTLIGHTISLIKELYTOCONFLICTWITHINVESTORSLEGITIMATEINTERESTINUNDERSTANDINGTHEBANKSPOTENTIALEXPOSURESSOLETUSCONSIDE
31、RHOWBANKSMIGHTISSUEFINANCIALREPORTSTHATWOULDCAPTURETHECOMPLEXREALITIESOFTHEIRFINANCIALSITUATIONSENHANCETHECREDIBILITYOFMARKINGTOMODELGIVENFASBSTWORECENTPRONOUNCEMENTSONLEVEL3ASSETS,THEREISNOQUESTIONTHATBANKSWILLINCREASINGLYVALUEILLIQUIDSECURITIESBYMARKINGTHEMTOMODELDURINGTHEFIRSTQUARTEROF2009,LEVEL3
32、ASSETSATTHE19LARGESTUSBANKSINCREASED7BY143,ASCOMPAREDWITHTHEPRIORQUARTERBECAUSEBANKSAREALLOWEDTOMAKEREASONABLEASSUMPTIONSBASEDONTHEIROWNESTIMATESFORRATESOFRETURNONSUBPRIMELOANS,MORTGAGEBACKEDSECURITIES,ANDOTHERTROUBLEDASSETSOVERSEVERALYEARS,MARKTOMODELVALUATIONSWILLUSUALLYBEHIGHERTHANTHOSEBASEDONREC
33、ENTTRADESOFSIMILARASSETSMARKINGTOMODELLETSBANKSPAINTARELATIVELYOPTIMISTICPICTUREOFTHEIRFINANCIALCONDITIONTHISISSURETOGIVERISETOREALINVESTORSKEPTICISMABOUTTHEACCURACYOFBANKVALUATIONSOFTROUBLEDASSETSASWARRENBUFFETTHASPOINTEDOUT,MARKTOMODELCANDEGENERATEINTO“MARKTOMYTH”HOWCANWECOUNTERTHATSKEPTICISMANDKE
34、EPVALUATIONSDEFENSIBLETOHELPINVESTORSUNDERSTANDHOWITARRIVEDATVALUESFORASSETSMARKEDTOMODEL,ABANKSHOULDDISCLOSEASUPPLEMENTALSCHEDULELISTINGLEVEL3ASSETSANDSUMMARIZINGTHEIRKEYCHARACTERISTICSMOSTIMPORTANT,ABANKSHOULDDISCLOSEENOUGHDETAILABOUTTHEASSUMPTIONSUNDERLYINGITSMODELSTOALLOWINVESTORSTOTRACEHOWITREA
35、CHEDVALUATIONSUNLINKACCOUNTINGANDCAPITALREQUIREMENTSTHEMOSTFUNDAMENTALCRITICISMOFFAIRVALUEACCOUNTINGISTHATITDRIVESBANKSTOTHEBRINKOFINSOLVENCYBYERODINGTHEIRCAPITALBASEINTHEVIEWOFMANYBANKERS,FAIRVALUEACCOUNTINGHASFORCEDAN“ARTIFICIAL”REDUCTIONINASSETVALUESTHATARELIKELYTOREBOUNDAFTERTHEFINANCIALCRISISSU
36、BSIDESTOINVESTORS,ONTHEOTHERHAND,NOTHINGISMOREARTIFICIALTHANPROCLAIMINGTHATANASSETISWORTHAPRICENOONEISACTUALLYWILLINGTOPAYTHETYPICALINVESTOR,MOREOVER,ISLESSCONFIDENTTHATDECREASESINTHEMARKETVALUEOFMANYBANKASSETSARETHETEMPORARYRESULTOFTRADINGILLIQUIDITY,NOTTHELASTINGRESULTOFRISINGDEFAULTSITMAYNOTBENEC
37、ESSARYTORECONCILETHESEDIFFERENTPERSPECTIVESBOTHCOULDBEACCOMMODATEDIFBANKSWEREREQUIREDTOFULLYDISCLOSETHERESULTSUNDERFAIRVALUEACCOUNTINGBUTNOTTOREDUCETHEIRREGULATORYCAPITALBYTHEFULLYDISCLOSEDAMOUNTSASEXPLAINEDBEFORE,IFABANKHOLDSBONDSINTHEAVAILABLEFORSALECATEGORY,THEYMUSTBEMARKEDTOMARKETEACHQUARTERYETU
38、NREALIZEDGAINSORLOSSESONSUCHBONDSDONOTAFFECTTHEBANKSREGULATORYCAPITALACCOUNTINGANDCAPITALREQUIREMENTSCOULDBE8UNLINKEDINOTHERAREAS,TOO,ASLONGASBANKSFULLYDISCLOSEDTHEDIFFERENTMETHODOLOGIESUNREALIZEDQUARTERLYGAINSANDLOSSESONBONDSINTHETRADINGCATEGORY,FOREXAMPLE,COULDBEACCURATELYREFLECTEDONTHEBALANCESHEE
39、TANDINCOMESTATEMENTSOFTHEBANKBUTFORREGULATORYPURPOSES,ITSCAPITALCOULDBECALCULATEDONTHEBASISOFTHEAVERAGEMARKETVALUEOFTHOSEBONDSOVERTHEPASTTWOQUARTERSTHISCOMBINATIONWOULDPROVIDEINVESTORSWITHDISCLOSUREREGARDINGTHECURRENTMARKETPRICESFORTHESEBONDS,WHILEREDUCINGTHEQUARTERLYVOLATILITYOFBANKSREGULATORYCAPIT
40、ALCALCULATEEARNINGSPERSHAREBOTHWAYSEVENIFREGULATORSWERETOFURTHERUNLINKBANKCAPITALCALCULATIONSFROMFINANCIALRESULTSUNDERFAIRVALUEACCOUNTING,BANKERSWOULDSTILLBECONCERNEDABOUTTHEVOLATILITYOFQUARTERLYEARNINGSABANKWHOSETOTALNETREVENUEFROMFEESANDNETINTERESTINCOMEWASQUITESTABLEMIGHTSEEITSOVERALLEARNINGSFLUC
41、TUATESIGNIFICANTLYFROMQUARTERTOQUARTER,THANKSTOCHANGESINTHECURRENTMARKETVALUESOFITSACTIVELYTRADEDBONDSANDOTHERASSETSANDTHATVOLATILITYMIGHTDEPRESSTHEBANKSSTOCKPRICEIFNOTFULLYUNDERSTOODBYINVESTORSLOOKINGFORSTABLEEARNINGSCOULDTHEINTERESTSOFBANKERSANDINVESTORSBERECONCILEDWITHREGARDTOTHEBANKSINCOMESTATEM
42、ENTYES,IFTHEBANKPUBLISHEDTWOVERSIONSOFITSEARNINGSPERSHAREEPSEACHQUARTERONECALCULATEDWITHFAIRVALUEACCOUNTINGANDTHEOTHERWITHOUTSUPPOSETHEBANKREPORTEDEPSOF54CENTSFORTHEQUARTER,COMPRISINGNETOPERATINGINCOMEOF62CENTSPERSHAREANDALOSSOF8CENTSPERSHAREDUETOUNREALIZEDLOSSESINTHEMARKETVALUEOFITSBONDPORTFOLIOTHE
43、BANKWOULDALSOPUBLISHASECONDEPSOF62CENTSPERSHARE,WITHANEXPLANATIONTHATTHISSECONDEPSEXCLUDEDTHOSEUNREALIZEDLOSSESTHEPUBLICATIONOFTWOEPSNUMBERSEACHQUARTERALONGTHESELINESWASRECOMMENDEDIN2008BYTHESECSADVISORYCOMMITTEEONIMPROVEMENTSTOFINANCIALREPORTINGTHETABLETAKENFROMTHISREPORTSHOWSAPARTIALRECONCILIATION
44、OFAHYPOTHETICALCOMPANYSNETINCOMEUNDERFAIRVALUEACCOUNTINGWITHITSNETCASHFLOW,WHICHEXCLUDESFAIRMARKETADJUSTMENTSSTRIPPINGOUTACOMPANYSCASHFLOWFROMITSINCOMESTATEMENTISTHETYPEOFEXERCISEUNDERTAKENBYMANYSECURITIESANALYSTSTOBETTERUNDERSTANDACOMPANYSFINANCIALSITUATIONIFBANKSFOLLOWEDTHECOMMITTEESRECOMMENDATION
45、,WECOULDHAVETHEBESTOFBOTHWORLDS9INVESTORSWOULDBETTERUNDERSTANDWHATPORTIONOFABANKSNETINCOMECAMEFROMOPERATINGEARNINGSANDWHATPORTIONCAMEFROMMOVEMENTSINTHESECURITIESMARKETSATTHESAMETIME,BANKEXECUTIVESCOULDBETTEREXPLAINHOWTHEIRBANKSWEREEARNINGSTABLEPROFITSFROMCOREOPERATIONS,REGARDLESSOFTHEQUARTERLYPRICEF
46、LUCTUATIONSINTHEIRSECURITIESHOLDINGSTOCUTTHROUGHTHISCOMPLEXDEBATEANDIMPLEMENTTHESENEEDEDREFORMS,POLITICIANSANDBUSINESSEXECUTIVESMUSTRECOGNIZETHATTHEREISNOSINGLEBESTWAYTOVALUETHEASSETSOFFINANCIALINSTITUTIONSSOMEASSETSMAYBEMOREACCURATELYMEASUREDUNDERFAIRVALUEACCOUNTING,WHILEOTHERSMAYBEBETTERMEASUREDUN
47、DERTHEHISTORICALCOSTAPPROACHFORTHEFORESEEABLEFUTURE,BANKSWILLCONTINUETOBESUBJECTTOAMIXEDATTRIBUTESYSTEM,COMBININGBOTHMETHODSACCORDINGLY,WESHOULDDEVELOPREPORTINGFORMATSSUCHASPRESENTINGTWOCALCULATIONSOFEPSTHATHELPCLARIFYTHEDIFFERENTTYPESOFINCOMEINCLUDEDINTHESAMEFINANCIALSTATEMENTITISALSOIMPORTANTTOREM
48、EMBERTHATFINANCIALSTATEMENTSARESCRUTINIZEDBYVARIOUSGROUPSFORDIFFERENTPURPOSESINVESTORSUSETHESESTATEMENTSTOASSESSDOWNSIDERISKSANDPOTENTIALFOREARNINGSGROWTH,REGULATORSTOENSURETHATBANKSHAVESUFFICIENTCAPITALANDINCOMETOWITHSTANDLOSSESONLOANSOROTHERASSETSGIVENTHESEDIFFERENTOBJECTIVES,FEDERALREGULATORSSHOU
49、LDUNLINKFINANCIALREPORTINGFROMCAPITALREQUIREMENTSFORBANKSFAIRVALUEACCOUNTINGDIDNOTCAUSETHECURRENTFINANCIALCRISIS,BUTTHECRISISMAYHAVEBEENAGGRAVATEDBYCOMMONMISPERCEPTIONSABOUTACCOUNTINGSTANDARDSSOMEINVESTORSINCORRECTLYASSUMEDTHATMOSTBANKASSETSWOULDBEVALUEDATMARKETPRICES,ASBONDPRICESWERENOSEDIVINGOTHERINVESTORSFAILEDTOREALIZETHATTHESHARPMARKDOWNSOFBONDSAVAILABLEFORSALEWOULDNOTPUTBANKSINVIOLATIONOFREGULATORYCAPITALREQUIREMENTSIFWECANMAKETHESEACCOUNTINGCOMPLEXITIESCLEARERBYADOPTINGAMULTIDIMENSIONALAPPROACHTOFINANCIALREPORTING,BOTHCOMPANIESANDINVESTORSSHOULDBEBET
