Decision time for the financial sector

Happy hour Thursday? Or weekend bender?

They may still be drunk, but the time is nigh for banks to sober up, thanks to FASB Rule 157. The balance sheets could be far worse than anyone possibly expects.

Let’s not forget…this pile is level 3 “property.”

UPDATE: Goldman Sachs says it’s out of the woods, with a net short (?) position in mortgage-backed securities and collateralized debt obligations. Ten seconds later (or was that ten seconds before), Larry Fink of Blackrock (one of the creators of the mortgage-back securities market) says things are going to get worse for the market and its prime sources of capital. Bank of America inches along, writing off $3 billion for this quarter. Between Deutsche Bank and Lehman brothers, the guestimated losses still range between $250 and $400 billion (only a fraction of which has been reported so far) – a number of bankers indicated they won’t be disclosing additional losses until the annual reports come out in early 2008.

Me thinks everyone’s fishing for one last bonus.