Mark-to-Market Rule Will be Suspended

[maqsur]

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4926316.ece

I found this article courtesy of LRC blog. Apparently one of the financial boards of the country will suspend m-t-m rule.

This means that owners of assets can set whatever they think is fair value (i.e. no longer decided by the market). As Mr. Rozeff on LRC says, this will cause confusion, and MORE unwillingness of institutions to lend to one another and people.

Doesn't that just feed into the credit crunch, meaning more losses on the stock indices coming soon?

[walt]

I was at an event last week where this was discussed, the implications of having to settle up cash were discussed as onerous - however - the person said re-establishing the uptick rule would be much, much more important.

[danberkeley]

from lewrockwell.com:


October 12, 2008
FASB caves in and helps the bear market
Posted by Michael S. Rozeff at October 12, 2008 08:06 AM

A news report here says that the Financial Accounting Standards Board (FASB) caved in to SEC pressure and will "suspend the mark-to-market rules to take account of extreme market conditions. Institutions will be able to use their own estimates of an asset’s worth instead."

This idiotic move will drive the prices of financial stocks down and carry the whole market down. The credit markets cannot function without transparency. Lenders have to know the real values of the assets of borrowers. If the borrowers can fabricate figures, they lack all credibility. Thus, FASB has undermined even the creditworthy borrowers with this move. Lenders will now be even more reluctant to extend credit, and interbank borrowing will lock up even more. The exchange economy is almost entirely a credit economy. Without credit, it will grind to a halt. We are looking at an imminent DEEP depression.

[AggieforPaul]

Mark to market was one of the provisions of the disastrous Sarbanes-Oxley legislation. Its an example of regulation backfiring. Im glad the rule got suspended.

[angelatc]

Mark to market was one of the provisions of the disastrous Sarbanes-Oxley legislation. Its an example of regulation backfiring. Im glad the rule got suspended.

It didn't backfire. It did exactly what it was intended to do. Just because it forced a correction in the market doesn't mean it was a mistake.

http://www.youtube.com/watch?v=GfcgwxPH7Rc - watch this all the way through to the end. Then get back to me with your case that the banks should be allowed to value the homes at anywhere near the same price they purchased them at.