mark-to-market question

[Cant_Be_Faded]

When I emailed my congressman last week, I asked him to temporarily halt the mark-to-market rule only for these subprime mortgage containing assets, so the banks have some breathing space and aren't constantly short on capital..

Now that the senate is deliberating, I've actually heard in the news mention of this way out...it seems some republicans in the senate attempted to tack it into this new version but it was refused.
Later we hear that the SEC is actually considering this, yet only on top of the 700b bailout. Also, today the rhetoric about us "gaining a return on this investment" is also through the roof.

AHF, nbadan, etc, all you who are following this closely, what do you think about this? I haven't been following too closely since last week.

Do you think temporarily changing the mark to market rules would work?
Do you think we have a shot at making a return on this, like we supposedly did with the S&L bailout in the 80s?

[Nbadan]

Mark to market and the bailout?

Mark to market for dummies
http://www.bellaonline.com/articles/art52952.asp

Subprime for dummies (note) MS powerpoint req
http://marktomarket.typepad.com/...

Bailout 4: Mark-to-model vs. mark-to-market
http://www.youtube.com/watch?v=w_GZqhAR0I4&feature=user

[Aggie Hoopsfan]

Do you think temporarily changing the mark to market rules would work?
Do you think we have a shot at making a return on this, like we supposedly did with the S&L bailout in the 80s?

It would have been great (removing the mark to market). Basically, once the value of those MBS packages began to decline, the banks had to factor that into the price of their assets, even if they had no plan to sell. It basically turned the finances of every company heavily vested in the mortgage securities into a circular firing squad.

That's a lot of the problem with this. Suspending mark to market would have been a free market, capitalist solution. So would have suspending capital gains taxes (some would argue that would have been 'rewarding' the rich, but it would have gotten their money back into the game on Wall Street inside of sitting on the sideline like it is right now - basically, inject new capital into the system).

But we can't give that stuff a chance, we have to railroad this bill down the throats of the American taxpayer so our buddies don't go broke [/Congress].

When almost your entire argument is 'we have to do something!' it usually ends up worse than if you had done nothing. And that's where we're at.

I still hold out hope that the folks in the House will stand firm, but being realistic about this all the greedy fuckers behind this legislation have to do between that vote and the one Friday is find 11 people to pay off. In D.C. that won't be that hard.

[Nbadan]

The Mark to Market rule created by the Financial Accounting Standards Board to stop companies from overvaluing assets because investors could not trust the claims of the value of assets, a crucial amount which allows investors to know the amount of risk. This suggestion to makes companies less transparent and increases the risk. It falsely allows companies to "guess" at how much they would like the assets to be worth rather than insisting that the assets are fairly valued. For example, you own a building which you think is worth $3million but nobody will pay more than $1million, under Mark to Market you can not continue to claim you own a $3million building when its real worth is only $1 million. The problem is that Wall Street borrows money based on its asset's value using it as collateral to borrow money. Do you want to lend to someone if they are falsifying their assets? ...Changing the "mark to market" from current market value to what exactly? Mark to make believe? Isn't that just taking a pool of CDOs and pretending we know what they are worth?

[byrontx]

Free license to cook the books.

[SnakeBoy]

.Changing the "mark to market" from current market value to what exactly? Mark to make believe? Isn't that just taking a pool of CDOs and pretending we know what they are worth?

I think gingrich was promoting a 3 month rolling average.