What We're Hearing

While FASB and financial regulators hammer how changes to "mark to market" accounting rules consider this little example that I present: Back in 1986 rogue S&L chief Charlie Keating built a luxury hotel at the foot of Camelback Mountain. The S&L, Lincoln Savings, financed the entire building. Charlie said it was worth $300 million and wanted it counted as capital on the S&L's books. Thrift regulators said the hotel was worth about $60 million. At the time Arizona's real estate market was in the tank (sort of like today) and hotel room vacancies were sky high. Charlie lost the battle and Lincoln's Phoenician Hotel was marked down. Lincoln -- which had many other financial problems besides the hotel -- eventually collapsed and Keating became a symbol of the S&L crisis. Back then regulators were clearly right in their valuation: $60 million. But today, 23 years later the Phoenician is probably worth $300 million. Was Charlie Keating really a visionary -- but 23 years too early? Discuss amongst yourselves...