Money Beat

If Newt Gingrich is for it, I'm against it.

No.
Transparency, always.

Marked to market is a terrible idea in this case. It throws fuel on the fire in an upswing, artificially inflating value at an accellerated rate. Then when a market is falling it throws ice water on it. It's self fulling a swing in either direction. The gains/losses should be reported slower- amortized out over time.

So, they want to change the accounting rules to help the banks lie and say "Things aren't as bad as you think!"

I'm still waiting for the FASB to fix FAS 118 (Impairment of Loans by a creditor) to be something logical. As it is, a bank can forgive interest and principle as well as extend the life of the loan and potentially NOT RECOGNIZE A LOSS. Under the current rule, as long as the gross future payments are not less than the current amount of the loan, there is not loss. This, unfortunately ignores the time-values of money and assumes that a dollar today is the same as a dollar 100 years from now. What SHOULD be done is compare the present values of the new loan compared to the present value of the current loan and get your loss that way.

So no, banks and financial institutions do NOT need MORE ways to hide their losses. What they need is to show their investors how incompetent their management is so stockholders can kick them out and put in competent leadership.

In short: If you need an accounting rule changed to stay afloat, you're already 5 feet under going on 6.

Bert-

I think that rate an item is marked to market should depend on what it is.

Trading Securities should be marked to market with no delay as they are to be sold at anytime, so these assets are greatly affected by the market value and the loss/gain can be immediate.

Oil/Gas reserves should NOT be marked to market AT ALL. If they are a reserve, then they are not even on the market, they are held for emergencies. If it isn't to be sold in the near future, then just because it can be sold for more does not add to value to the company; it is still going to be held as a reserve. And even if you WERE planing on selling it, then it is INVENTORY and inventory is NOT marked to market if it results in a GAIN, only if the value has gone DOWN is inventory market to market. Current rules allow for inventory to be marked up ONLY if it has been previously marked DOWN and ONLY back to it ORIGINAL value.

Long Term Financial securities are only marked down when there is a very likely chance that their value will not recover, like these toxic foreclosed mortgage-backed securities. Then, the asset is written-down.

Even the Financial Accounting Standards Board’s couldn't figure out how to deal with the mark-to-market accounting shortly after the Enron debacle. Even the Arthur Andersen accounting firm had problems with it which led to its failure too. Enron filed for bankruptcy 2001. The Financial Accounting Standards Board’s has had 7 years and they did nothing. nomedals.blogspot.com

What Enron was doing was using Special Purpose Entities (SPE's) to go and HIDE those High risk assets. They could get away with taking those items off their book and selling them to a 'seperate' entity. The rule, before the scandal, was that you did not need to consolidate the SPE in it had more the 3% outside equity (i.e. investors that were not Enron) and the rest could be debt.

So, what Enron did, was 'sell' their high-risk assets to the new 'company,' which paid for it mostly with debt, record any 'gains' from the sale, and keep the asset off their books. And they managed to get people in invest in these SPE's by guaranteeing any losses the investor may experience with their stock.

Now, the rule is that the SPE must have 10% or more outside equity, and you must consolidate if you will receive either the majority of the gain, or guarantee the losses (the majority of the losses if this is with multiple companies.)

So, marking-to-market wasn't the major player in the Enron scandal, it was SPE's and hiding risky/bad assets.

Vote 'No' to the bailout-Resuce Plan. The New Plan, puts Humpty Dumpty back onthe Wall Street. Wall Street is the seperation, between The 5% and the 95%. The New Revisions, only make Wall Street in control again. We wil once again loose our 'Independence'. Why would anyone support, the New Bill, will only bring forth a Credit Line of 'Mass Destruction.'Please vote 'No' to 'Wall Street'. No More Division.
Let Americans own their own homes. By Saving Wall Street, They can still own Your Houses, and later, evven raise the intrest rate, to earn themselves more money.
Vote Independant.
WallStreet will Buy McCains 'WIN'
Remember Clintons Suprise?
Take it to the Bank, That these stall tactics, is a Nixon-Clinton-Bush-McCain set-up.
Follow the trail Back to the Beginning.

Watch CNN and MSNBC

Call Your Congress and Say NO, to the same Bush McCain division Plan.

Vote Independent. Not Wall Street Support.

Looking At McCains Past Record, He has only voted, when his elect 5%, would make more of a Gain.

McCain was held away form voting No, on the Past Bill, because his 5% would not gain anything. This is a set-up. Put this view in your History Books. McCcain is Buying Wall Streets 'Fixed' Votes.
Vote No to McCains Afgan War 'Draft'. View McCain's past voting record. Voted against money for Younger Education, But supports his Funding of Teenagers of Drafting Age.
Vote No to Mc Wall Street.

Watch CNN and MSNBC for the Truth.
No more Bi-Partisanships. This leaves out 'Independence'. This takes th American Independence away.
Vote No to McCain

Vote 'No' to the bailout-Resuce Plan. The New Plan, puts Humpty Dumpty back onthe Wall Street. Wall Street is the seperation, between The 5% and the 95%. The New Revisions, only make Wall Street in control again. We wil once again loose our 'Independence'. Why would anyone support, the New Bill, will only bring forth a Credit Line of 'Mass Destruction.'Please vote 'No' to 'Wall Street'. No More Division.
Let Americans own their own homes. By Saving Wall Street, They can still own Your Houses, and later, evven raise the intrest rate, to earn themselves more money.
Vote Independant.
WallStreet will Buy McCains 'WIN'
Remember Clintons Suprise?
Take it to the Bank, That these stall tactics, is a Nixon-Clinton-Bush-McCain set-up.
Follow the trail Back to the Beginning.

Watch CNN and MSNBC

Call Your Congress and Say NO, to the same Bush McCain division Plan.

Vote Independent. Not Wall Street Support.

Looking At McCains Past Record, He has only voted, when his elect 5%, would make more of a Gain.

McCain was held away form voting No, on the Past Bill, because his 5% would not gain anything. This is a set-up. Put this view in your History Books. McCcain is Buying Wall Streets 'Fixed' Votes.
Vote No to McCains Afgan War 'Draft'. View McCain's past voting record. Voted against money for Younger Education, But supports his Funding of 5% Teenagers of Drafting Age.
Vote No to Mc Wall Street.

Watch CNN and MSNBC for the Truth.
No more Bi-Partisanships. This leaves out 'Independence'. This takes th American Independence away.
Vote No to McCain.