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TOP STORIESDid accounting rules do for Lehman?17 September 2008By eFinancialCareers UK COMMENTSLehman was a perfectly viable operation. FASB 107 just got in the way. Read all comments »Dick Fuld may be widely seen as an ogre guilty of hubris and ineptitude, but some people are coming out on his side.
The argument in favour of Fuld goes a little like this….There was no need for a company generating an operating profit of $600m a quarter to go under simply because it had a $6.4bn non-cash charge to revenues – particularly when that non-cash charge related to potentially spurious mark-to-market valuations of currently illiquid products.
According to Fuld’s few remaining fans, Dick had simply bet on the housing market. That call was wrong – in the short term. Longer term, all could have come good, if only mark-to-market rules hadn’t intervened.
Give Dick a break below…
COMMENTSShaman boy, Derivatives, Wed 17 Sep 08Lehman was a perfectly viable operation. FASB 107 just got in the way. Join the debate »l, Operations, Wed 17 Sep 08The only thing that did for Lehman was Lehman. Live with it. Join the debate »Serge, Private Banking / Wealth Management, Wed 17 Sep 08Relaxing mark to market accounting rules in the current environment would only be storing up big problems in the future. It is not a solution simply to default to a fundamental value that may never again exist. Asset writedowns need to be registered as they occur so that the toxicity can work through the system. Join the debate »Dave, Private Equity / Venture Capital, Wed 17 Sep 08FASBY 157 has been the overarching problem. Companies that are viable and have no intent to sell an asset are being forced to mark assets to liquidation vales even if there is no need for the institution to sell them. If the fundamentals have not changed an asset should not be market either up or down as long as the holder does not plan to sell anytime soon. The problem we have today is that there are forced asset sales going on and the buyers are squeezing as much as they can to get the lowest price. Join the debate »CPA, Accounting, Mon 22 Sep 08this ranks as one of the stupidest propositions.....this is like saying I lost at tennis because the introduced lines which the ball must fall in between. A true industry leader would have (no pun intended) accounted for the incoming rules and adjusted teh game plan accordingly. It's not like the rules came in overnight. Join the debate »John Titor, Information Technology, Tue 23 Sep 08It serves you right!. Somebody told me 2 years ago: "Only the best minds works in Lehman Bro".
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