Disparity in Bank Asset Valuations

The latest piece from Jonathan Weil of Bloomberg has been cited all over the blogosphere during the last few days. So, I am not going to re-hash the view of others. However, what did stand out most to me is that the discrepancy between the fair value of assets and the value on the balance sheet seems to be growing. I would have assumed that the rally in numerous markets and overall increase in liquidity would be pushing fair value closer to stated value. Apparently not though:

Bank of America Corp. (BAC) said its loans as of June 30 were worth $64.4 billion less than its balance sheet said… Wells Fargo & Co. (WFC) said the fair value of its loans was $34.3 billion less than their book value as of June 30. The bank’s Tier 1 common equity, by comparison, was $47.1 billion.

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