Higher Valuation Allowed for Brooklyn Bridge-Backed Derivates

Bankers, investors, and bond holders are breathing easier now that mark-to-market accounting rules have been eased and some hard-to-value assets that were collateralized by the Brooklyn bridge can be pegged to their long-term potential. It was only recently discovered that some bond bundles held by Citigroup and other big banks included loans backed by the famous New York bridge, although it is uncertain whether ownership of the bridge was clearly established. What was evident was that Brooklyn-bridge backed assets were sold and resold to many thousands of buyers, although the buyers did not know at the time that they were buying it. At first the mortgage bonds were highly valued and placed in the highest tranch, but later when the loans were questioned, the tranch level was lowered, so that the bridge in fact dragged down the overall value of the derivatives rather than bolstering them.

But now, according to investment bankers, the bridge can be assessed at its value at some future time, not precisely estimated, but agreed to be "not soon." What it means for the present, however, is that banks, their investors and bondholders, and ultimately the taxpayers can feel a new sense of solvency. The assets themselves can be offered for resale at a much higher price, and in any case the books will show a more solid anchor value. Oh, and while we're on the subject, would you like to buy the bridge?