Bailout Mark To Market Accounting: Jim Chanos Discusses The Geithner Rescue Plan, AIG, And Regulatory Capital Requirements (CNBC Video)

Site favorite and fellow Greek, 'The TruthSeeker' Jim Chanos appeared on CNBC's Squawk Box this morning for a great discussion on the Geithner bank bailout plan, MTM accounting and regulatory capital requirements.

Chanos wrote an outstanding editorial today in the Wall Street Journal questioning the move to abandon mark-to-market accounting.  As Chanos has been saying for weeks, granting forbearance on regulatory capital levels is a much smarter idea than chucking MTM.

Related:

Chanos Says We Will See Orange Jumpsuits Soon For AIG and Lehman Execs

From CNBC:

Suspending regulatory capital requirements is more viable than adjusting mark-to-market accounting rules and therefore a better way of approaching the ongoing financial crisis, said James Chanos, Kynikos Associates president & founder.

“It’s much easier to do that globally than to tinker with everybody’s books,” he said.

If accounting rules are altered, said Chanos, investors will pay a lower multiple on reported earnings. Accurate data is also essential in restoring investor confidence in the markets, he said.

“Don’t water down corporate accounting,” he said. “Accounting is destiny. And companies, like people don’t often change their spots.”

Meanwhile, Treasury Secretary Tim Geithner’s toxic-asset plan is a step in the right direction, said Chanos.

“What the Treasury and the government is learning is that the more details you tell the market, the better off you are,” he said.

Investors will have to come to grips with the fact that it’s Washington and not the private sector that is guiding the markets forward, Chanos said. In fact, government intervention will close the gap on the bid side, he added.

“Cheap financing, the guarantees will move that up,” said Chanos. “Whether the banks will be willing to sell by dropping the offer side of the market, that remains to be seen.”

Comments

[DailyBail]

Jim Chanos On AIG, Or Why We Need Shorts

http://www.usnews.com/blogs/the-ticker/2009/03/24/jim-chanos-on-aig-or-why-we-need-shorts.html

[DailyBail]

WSJ’s Future of Finance Initiative Gets Under Way

For nearly two years, the government and Wall Street have been locked in an adversarial relationship. The credit crisis has intensified, taxpayers are outraged, and last week the prospect of a 90% tax rate on bonuses showed just how far the two sides are from each other. And yet, there are so many misunderstandings that it feels that even now, Washington and Wall Street have not been properly introduced.

As the old movie quote goes, what we have here is a failure to communicate.

So the Wall Street Journal is stepping in with the Future of Finance Initiative, which will get a group of the “thought leaders” on the topic in one place to share ideas. The two-day conference will include a group of financial luminaries, including Goldman Sachs co-president Gary Cohn, Blackstone Group co-founder Steve Schwarzman, BlackRock co-head of fixed income Peter Fisher, Kynikos Associates founder James Chanos, star analyst Meredith Whitney and TIAA-CREF CEO Roger Ferguson.


http://blogs.wsj.com/deals/2009/03/23/wsjs-future-of-finance-initiative-gets-under-way/

[DailyBail]

By Phil Izzo

The Wall Street Journal launches an initiative tonight on the Future of Finance, bringing together key figures from both the public and private sector to look at the financial industry and where it goes from here. Along with our colleagues from Deal Journal, we’ll be bringing you coverage of the conference, including a speech by Treasury Secretary Tim Geithner.


http://blogs.wsj.com/economics/2009/03/23/geithner-q-and-a-kicks-off-journals-future-of-finance-initiative/

[DailyBail]

We Need Honest Accounting

Relax regulatory capital rules if need be, but don't let banks hide the truth.

http://online.wsj.com/article/SB123785319919419659.html

[DailyBail]

The U.S. government plan to rid banks of toxic assets will rob American taxpayers by exposing them to too much risk and is unlikely to work as long as the economy remains weak, Nobel Prize-winning economist Joseph Stiglitz said on Tuesday.

"The Geithner plan is very badly flawed," Stiglitz told Reuters in an interview during a Credit Suisse Asian Investment Conference in Hong Kong.

U.S. Treasury Secretary Timothy Geithner's plan to wipe up to US$1 trillion in bad debt off banks' balance sheets, unveiled on Monday, offered "perverse incentives", Stiglitz said.

The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said.

"Quite frankly, this amounts to robbery of the American people. I don't think it's going to work because I think there'll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer."


http://www.cnbc.com/id/29848741