The Tip of the Iceberg II
When the FASB issued M2M it included various scenarios for valuing assets held for differing time periods, such as "held to maturity" - with models such as "cash flow." Everyone has erroneously applied the worst case model scenario, including the auditors, and the FASB director TESTIFIED before the hearing it was (1) because they didn't have expertise to do the "cash flow" model or (2) they didn't have the people to do the cash flow model and (3) the auditors, who are suppose to know better, went with the worst case scenario -- excuse: concerns over litigation.
That's why the global meltdown.
What the best outcome would be ... would be for all financial companies to keep M2M and require more info on the holdings and timeframe in the quarterly and annual reports; and the USA gov't to ensure that the financials, the auditors, the FDIC, the FASB, and the SEC are using the correct model scenarios per holdings types and time frames. This means, if they need to use the cash flow model, they get their people trained on the cash flow model and USE the cash flow model. The same for the other scenarios.
It's not unrealistic to expect that many financials will have assets that will require ALL the models, that "conspicuous asset segregation" would be the transparency everyone wants. That it will require more reading and comprehension, seems to be the common sense argument many of the debaters (especially the shorts) don't want to hear. They don't want to do their own homework. They want it all lumped in a single "simple" category, even if that results in WRONG valuations.
To the extent Mark to Market is attempting to value a financial company asset FAIRLY and ACCURATELY, honesty should hold that a LOW ball valuation is just as dishonest as overvaluing the "asset" .