Sleight of Hand
Well, despite the whinging tone of the previous post, I’m looking on the sun more and more as an enemy. Everywhere it goes, it seems, it sucks value out of the stock markets it shines on. The International Date Line seems like the Maginot Line for financial markets. I really wonder if it’s (the sun) not a rogue ship from The Day The Earth Stood Still.
The government has been very busy running around with buckets of cash, trying to shore up the system. And then this slithers in under the radar:
The five-member Financial Accounting Standards Board decided to provide some flexibility in applying “fair value” accounting where there is no market for a security — like the market for banks’ mortgage-backed assets that has been dysfunctional for months.
The board expects the new guidance to take effect Saturday.
“We’re giving people a wider range of options and input to get to fair value,” said FASB spokesman Neal McGarity.
Fair value accounting, also known as “mark-to-market” accounting, requires banks to value their mortgage-related assets at current market prices. Devastated by the write-downs they have taken on mortgage assets since the collapse of the housing market, banks — with the backing of congressional Republicans — have been pushing hard for the Securities and Exchange Commission to suspend the requirement.
So a central technique for resolving the problem is to change the accounting rules so as to obscure further the toxicity of banks’ assets. Republicans haven’t lost their taste for Enron Kool-Aid. Is there a pig these guys won’t put lipstick on?
