something doesn't add up... or does it?, page-3

I think you're over simplifying a very complex issue here BigRedRoo.

The issue to start with is nobody knows what any banks balance sheet really looks like because of the fact they store so many assets off balance sheet. Banks are not reporting their real losses. They are legally allowed to hide "mark to market" accounting losses, because they are "banks". For some reason, SEC allow banks to change the classification of assets at will. If they decide to claim that they are holding particularly worthless securities, mortgages, etc., for "investment" rather than sale, they don't need to mark them to the market value.

SEC rules allow banks to value investment assets at the assumed value at "maturity", rather than market value, regardless of how worthless they may have become. For example, if a bank is holding $10 billion in subprime loans of people that are way underwater on their mortgage and will certainly go bankrupt in the next 12 months, it need not mark them down now, so long as it says it is holding the loans "for investment".

the frauds that these big banks are allowed to get away with is bad enough. Their balance sheets are black voids that are impossible to decipher with any accuracy. Their books are filled
with worthless securities, valued at amounts that no one would ever pay.

So to evenly spread these loses over the big banks just doesn't cut it as analysis because in all reality no-one knows where all this stuff is becuase its being held off book.

In the end these loses are what preventing the banks from lending at the moment because they know if they take on any more bad debt (Bad debt rises in a recession) it will futher leverage their hidden balance sheets. This is why the TARP failed because of the amount of hidden toxic debt, ie subprime mortgages, are still unaccounted for on the big banks balance sheets.