Financial Week reports that top banks are reporting a rise in level three assets. Which just might presage another round of bitter valuation haircuts. Citi, for example, has said that level three assets, at the end of September, were $157 billion up from about $133 billion at the end of last year. JPMorgan Chase reported $119 billion in level three assets, compared with $71 billion at the end of 2007. Level two assets are also on the rise and all this means the fair value debate will be crackling for a while longer. One analyst was quoted: "We're living in a 2.5 world." The decision by Treasury not to use TARP funds to buy securities plays into this situation. So the best hope may be vulture-like funds, but who knows how much toxic stuff they'll swallow.

For more:
- here's the Financial Week article 
- here's some background from FierceSarbox

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