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State Street Corp reports a 13% gain in EPS in 2008 amidst a global financial crisis. The stock price declines 59% on the day of the earnings report. This one day decline was exceeded in the prior 12 month period by only one non-bankrupt S&P 500 company. That company was AIG, Inc which declined 61 % on the day Lehman Brothers declared bankruptcy. While State Street reported USD5.0 billion in profits over the 4-year period 2005-2008, the company also sustained USD10.0 billion in after tax mark-to-market losses on its 'available for sale' investment portfolio and the investment portfolios of its conduits. The question is, how has the firm performed over the past four years? Has it earned USD5.0 billion or lost USD5.0 billion? Fair value accounting plays a key role in the dilemma. How should a financial services firm measure and report income in the face of disorderly and illiquid markets for its principal assets? The case also examines how management at State Street responded to the deterioration in its capital ratios generated by 'fair value' accounting.