The Rule That Reduced Banks to a Quivering Blob of Matter

Andrew Ross Sorkin's article about Steve Schwarzman and FAS 157 is the gift that keeps on giving. First Barry Ritholtz took a swipe, then Jack Ciesielski attacked it forensically from a professional accountant's point of view, and now Gari has taken the rabid I'm-not-an-accountant approach, which might not be as clean as Roger Ehrenberg's considered essay but is certainly more fun:

Now, you will point out that several of the banks that are taking hideous write-downs might properly be called mega-banks, strange and loathesome combinations of investment banks and commercial banks, which in the current market are looking a bit like that dog that got caught in the Fly's matter transporter...
If you want to be in the business of cooking up debt obligations, and you either wish to be bailed out if the process goes wrong, or financial stability demands that you be bailed out if the process goes wrong, then absolutely a horde of regulators should be crawling over your books at all hours. Absolutely some incredibly conservative leverage levels should be applied to your business. Absolutely your masters of the universe should be incredibly boring people in bad ties and spiritual affinities with Germans.
But hey, I'm not accountant.

What no one has bothered to point out, maybe because it's so obvious, is that Sorkin's entire article is basically Schwarzman talking his book. Schwarzman runs a private-equity shop, which buys up companies with a little bit of equity and a lot of bank debt. Right now, the banks can't extend new loans, because they've lost so much money as a result of writing down the old ones. So Schwarzman's bright idea is that maybe if they didn't need to write down the old loans, that would make it easier for him to get new ones. Good luck with that, Steve. You'll need it.

Update: James Mackintosh notes that Schwarzman seems to have done a complete U-turn on this issue.