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What Does Mark To Market - MTM Mean?
1. A measure of the fair value of accounts that can change over time, such as assets and liabilities. Mark to market aims to provide a realistic appraisal of an institution's or company's current financial situation.
2. The accounting act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value.
3. When the net asset value (NAV) of a mutual fund is valued based on the most current market valuation.
The Fed reported that if its worst-case scenario was realized banks' additional losses could total around $600 billion. Under the test, the Fed determined that 10 of the banks would collectively require $185 billion in new capital. Bernanke pointed out in his remarks much of shortfall has already been covered, and that the affected banks need only increase their equity buffer by $75 billion.
The Fed has taken criticis from some quarters that the exercise was insufficiently tough, and that the outcome understates the true nature of the financial challenges facing banks. Bernanke's speech sought to allay those concerns.
"Projecting credit losses in an uncertain economic environment is difficult, to say the least, but the intensive, painstaking nature of this process gives us confidence in our results," Bernanke said. "We believe that our estimates of needed capital buffers are appropriately conservative," given that they are based on decidedly pessimistic potential outlooks, he said.
While noting projections based on forecasts is a process that's "inherently uncertain," Bernanke nevertheless viewed the stress test process as worthwhile.
Europe Needs More Coordinated Stimulus, Banking Rules, IMF Says
May 12 (Bloomberg) -- European countries should improve coordination of economic stimulus plans and go further in integrating financial regulation than they are now considering, the International Monetary Fund said.
“Europe is the most economically integrated market economy in the world and yet the policies to address the crisis have been undertaken at a national level,” Marek Belka, director of the IMF’s European department, said today in a statement. The region faces the “economic storm of a lifetime and it urgently needs to weatherproof its institutions,” he added.
“Further actions by policy makers, particularly in the financial sector, are needed to restore market trust and confidence,” Belka said. “What is mostly needed is a robust approach to coordination, in particular on financial and regional macroeconomic stability.”
“Further room to reduce interest rates should be exploited swiftly and additional unconventional easing will have to be considered,” the IMF said in today’s report.
May 12 (Bloomberg) -- U.S. stocks erased an earlier drop as former Federal Reserve Chairman Alan Greenspan said the housing market may be on the verge of recovery and financial markets should continue improving.
Financial shares in the Standard & Poor’s 500 Index reversed almost all of a 4.7 percent decline after Greenspan told a conference that companies are able to raise more capital than they expected. Pfizer Inc. led gains in the Dow Jones Industrial Average after Credit Suisse Group AG said the company may boost its dividend after taking over Wyeth.
Originally posted by Karlhungis
I can't help but think that the bottom is going to really fall out this fall. I think this fall will be one that we will all remember.