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GLG News by Valuation Specialists

Robert McCabe, Partner

Robert McCabePartnerMcCabe & Associates, PhDs What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

More Attacks on Fair Value

October 3, 2008

Alls Fair: The Crisis and Fair-Value Accounting | www.cfo.com

Why does the SEC not enforce the rule against "naked short selling?"

Robert McCabe, Partner

Robert McCabePartnerMcCabe & Associates, PhDs What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

Is “Fair-Value” Really that Dangerous?

September 10, 2008

Fair-Value Revolution: Historical cost accounting is fading as Corporate America marches into a new era. | www.cfo.com

The article makes several claims that need a response.  First, it declares the principal question that accounting tries to answer is “What is a company really worth?”  Second, it states that fair value played a role in the recent “economic meltdown,” because the fair value rules forced “banks to sell their securities in plummeting markets.” Third, it states that historical cost reporting “enabled companies to work their way out of trouble,” by waiting until the market turned around.  Fourth, the case is made for fair value measures being unreliable.  Finally, it’s noted that International Financial Reporting Standards (IFRS) favor greater use of fair value. 

Robert McCabe, Partner

Robert McCabePartnerMcCabe & Associates, PhDs What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

Could something be clearly worth zero?

April 28, 2008

SEC's Atkins Calls for Fair-Value Guidance | www.cfo.com

How can an SEC Commissioner who is obviously not familiar with Fair Value estimates call for changing the existing guidance? The value of something is zero if that is what you can buy and sell it for.    

Robert McCabe, Partner

Robert McCabePartnerMcCabe & Associates, PhDs What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

Why do bankers oppose the use of fair value?

April 23, 2008

Bankers: Fair Value Is Like Throwing Gasoline on a Fire | www.cfo.com

Claiming a "mixed attribute" accounting model provides a better picture of a company's business and earnings engine, bank trade groups blast full fair value. The bank trade groups argue that periodic updating to fair value would lessen the predictive value of future cash flows.  They also argue that “a mixed measurement model is essential for the faithful representation of an entity’s business model and how it generates earnings.”   

Robert McCabe, Partner

Robert McCabePartnerMcCabe & Associates, PhDs What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

Should Sovereign-wealth funds be regulated?

February 19, 2008

The invasion of the sovereign-wealth funds: The biggest worry about rich Arab and Asian states buying up Wall Street is the potential backlash. | www.economist.com

Is the fear of sovereign-wealth funds justified? Are sovereign funds being used for nefarious objectives? Can the U.S. Securities & Exchange Commission regulate sovereign funds? 

Robert McCabe, Partner

Robert McCabePartnerMcCabe & Associates, PhDs What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

Is Accounting Regulation Being Dismantled?

February 8, 2008

Donaldson Slams "Pendulum Pushers" | www.cfo.com

Can the SEC protect investors without regulation? 

Robert McCabe, Partner

Robert McCabePartnerMcCabe & Associates, PhDs What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

Will IFRS be required soon?

January 24, 2008

ACCEPTANCE FROM FOREIGN PRIVATE ISSUERS OF FINANCIAL TO U.S. GAAP | sec.gov

Recently, the SEC eliminated the GAAP reconciliation requirement as part of Form 20-F for foreign issuers.  Almost simulaneiously, the Commssion issued a Concept Release that would allow U.S. issuers to drop GAAP and use Interantional Financial Reporting Standards.  The implications of these moves are vast and the author believes are at best premature. 

Raj Mehra, President & Founder

Raj MehraPresident & FounderChelsea Advisory Services What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

Low Loan Loss Reserves at Banks Could Cause Problems Ahead

September 20, 2007

E*Trade Hit By Mortgage Turmoil | online.wsj.com

Loan loss reserves at banks are at historic lows. At the same time, the credit cycle has turned viciously negative, particularly for mortgages. Banking regulators are likely to ratchet the pressure up on banks to raise their loss reserves. The most vulnerable are banks with outsized exposure to the mortgage lending business

Raj Mehra, President & Founder

Raj MehraPresident & FounderChelsea Advisory Services What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

Countrywide Spells Out Its Strategy to Manage Credit Market Crisis

September 10, 2007

Countrywide Communicates Staff Reductions to Employees | online.wsj.com

Countywide's announcement late last Friday and Angelo Mozilo's letter to employees provide a unique window into CFC's strategy for addressing the impact of the credit crisis on its business. The letter provides details on the steps that CFC is taking to shelter itself from the fallout. Unfortunately, the strategy, while undoubtedly aggressive, may not be enough.

Raj Mehra, President & Founder

Raj MehraPresident & FounderChelsea Advisory Services What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

Writedowns of Retained Interests Could be Next Shoe to Drop for Subprime Lenders

September 5, 2007

NovaStar to Slash Lending and Cut Jobs | www.nytimes.com

Retained interests from securitizations made up more than 75% of the shareholder's equity at NFI. Also, the company has elected to finance these securities. Demand, never very strong to begin with, has deteriorated severely in the last month. The company could be forced to recognize a sizeable writedown in its retained interests, which will reduce book value. Other lenders that have sizeable retained interest holdings include Countrywide Financial ('CFC') and Rescap Holdings (a subsidiary of GMAC).  

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