Banks: The Art of Pricing Illiquidity

Since the ending of the credit bubble in the summer 2007, the major brokerage firms and banks have been dealing with the accounting aftermath. To minimize (or hide) the damage they did to their own balance sheets, these firms have been using "Level 3" accounting standards -- a GAAP-approved method (Generally Accepted Accounting Principles) to account for hard-to-value assets.

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