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Mark-To-Market Reform – Guess It Ain’t Gonna Happen (sigh…)

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February 27, 2009 – Comments (0)

I was on the cusp of squandering a Ulysses S. Grant on a book by Bloomberg Press about CDS, when I read the Wikipedia entry on this subject. This led me to the entry on mark-to-market, and then on to the Bloomberg reports on this. I did a search, and came up with these names who do NOT support change in the MTM or Fair-Value or FAS157 junk:

Bernanke

Geithner

SEC chairman (what’s her name…)

FASB

Y’know, there are many options to the FASB standard on this. You could allow or require that Level 3 securities be carried at a value calculated on their cash flow values (so-called European whatevers). Land and equipment are mostly carried at their acquisition values (even though wear and tear or land values have drastically changed the $$$ if you were to simply sell it on EBay), and you can easily require that they be carried at this level. A thinly traded security has an entry value, an exit value, and an intermediate value based on by-gosh-and-by golly. FAS157 requires the hypothetical exit value for accounting purposes. Surely this can be changed to advantage?

 

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