Time To Suspend Mark To Market Bush

Discussion in 'Economics' started by Cdntrader, Sep 29, 2008.

  1. HotTip

    HotTip

    The problem with mark-to-market is that due to the leverage regulations for financial institutions, a drop in your capital (as a result of M2M losses) means that you have to either raise more capital or deleverage, which results in firesale prices of MBSs and credit tightening. Suspending M2M would alleviate this stress on the financial system overnight.

    I'm not an accountant, but for those that argue in favor of M2M in the name of transparency, can't just move M2M down to the footnotes? That way you can still have your transparency for investors (and therefore not violating Sarbanes-Oxley) while using fair value, hold2maturity or any other more favorable form of valuation on the actual balance sheets to calculate your regulatory leverage limits.
     
    #21     Sep 30, 2008
  2. ABSOLUTELY CORRECT!
     
    #22     Sep 30, 2008
  3. i'm going on a huge ass shopping spree using IOUs written on gumwrappers in crayon. cya
     
    #23     Sep 30, 2008