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Posted on Tuesday 17 March 2009


Accounting Standards Eased Today!
by: Chris Bowers
March 17, 2009

    Financial stocks also gained support from news that the Financial Accounting Standards Board, which sets U.S. accounting rules, proposed to give more leeway on mark-to-market accounting rules. Mark-to-market accounting has forced financial institutions to write down billions of dollars in assets.
    Kudlow says that these changes will lift the "jackboot" of the Securities and Exchange Commission "off of the market":
Yes! The real problem is that the regulations on the financial services industry were too strict! We needed to ease the regulations, and make the economy even more bullshit based! That will surely get us out of the recession!
Mark-to-Market Rules May Get Adjusted
TheStreet.com
03/16/09
By Robert Holmes

The Financial Accounting Standards Board, under considerable pressure to alter the fair value accounting rules blamed for exacerbating the woes of the financial sector, has proposed more leeway for banks in determining the value of distressed assets.

FASB Chairman Robert Herz said that the agency may allow companies to use "significant judgment" in valuing assets as part of the revised fair value, or the so-called mark-to-market, accounting rules. The implementation of any change could come in time to allow financial companies to employ the new rules for their current-quarter financial statements.

Herz said the board is set to vote on the proposal April 2 after a 15-day public comment period, according to Bloomberg. Many financial institutions have long complained about the FASB’s statement 157, which was implemented in 2007 to change the definition of fair value — the measure of the worth of an asset on a company’s books – along with the methods used to determine fair value.

The mark-to-market rules have led to assets being priced well below their real valuation in some cases, making it impossible for banks to purge the toxic assets from their books at anything but fire-sale prices…
Well, I don’t get this one, except that it’s a way for people to make their "books" look better, get their ratings higher, stuff like that. From our perspective, this is the kind of malarkey that got us into thisawaful fix. Whenever they throw in terms like credit default swaps or mark to market accounting rules, you know something’s up

I think most of us believe that all of these accounting and regulatory tricks are the way the financial industry has turned our monetary system into a great big casino where they play with our money. So we just hate any sound of loosening anything. And when they do it, the Market goes up. When they tighten things, make them transparent, add a regulation or two, we feel good, and the Market goes down. 

It’s beginning to feel like the Market has become mostly a dishonest place to me. It goes up when we demand honesty and down when it’s a playground for the Market Pros. What’s that about? It’s supposed to have something to do with the value of the companies traded. I know it’s not going to change just because I would like it to, but the current notion of a "protected financial industry" really can’t be tolerated in its current form. If we’ve learned anything from this current mess – that’s it. In the oft-played roundtable with Bernie Madoff, he decries the way the regulators make it impossible to make any money in the financial business these days. They just "don’t understand that it’s a for-profit enterprise," he quips. He goes on to include "the academics" in the not understanding group.

Like Bernie, the “regulators” and the “rules” are the enemy. Poor guys just can’t make a buck. I wonder if it ever occurs to them where that money comes from. That certainly seemed to be lost on this man…

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