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SEC adopts (partially) mark-to-market fix
The SEC stepped in today and eased or clarified the mark-to-market lending rules. This has the immediate effect of freeing up credit for businesses and individuals. Doing so cost the taxpayers nothing. While they didn’t suspend it entirely, they have, by clarifying the rule, given the industry some breathing room.
Even with this action today, the Senate still seems intent on spending $700 billion dollars of taxpayers’ money! Outrageous. This MTM solution was partially proposed by Dave Ramsey (and many others have suggested the same thing) yesterday in his Common Sense Plan, item II:
MARK TO MARKET
a. Remove mark to market accounting rules for two years on only subprime Tier IIIbonds/mortgages. This keeps companies from being forced to artificially mark downbonds/mortgages below the value of the underlying mortgages and real estate.
b. This move creates patience in the market and has an immediate stabilizing effect onfailing and ailing banks–and it costs the taxpayer nothing.
Powerline says, “If revision of the mark to market rule has as much impact on credit markets as many have predicted, it may strengthen the resolve of those who think there are better solutions to the problems in our financial markets than a $700 billion bailout.” See the article here.
Please call your U.S. Senator on Wednesday and encourage your friends and family to do the same.
Arkansas Senators:
- Mark Pryor(877) 259-9602 (Toll Free from Arkansas)
D.C. Office(202) 224-2353
- Blance Lincoln800-352-9364
D.C. Office(202) 224-4843
jeff, i’ve very much enjoyed reading your post regarding the recent market conditions. i will admit that i vacillate between differing opinions regarding the $700B and would readily admit it would by far be optimal if we didn’t even find outselves in this situation!! [note the following disclaimer: this very much is me voicing my personal opinion] however i believe, if the bill is structured correctly (note: “correctly” being the operative word and the operative word assumes this is just the $700B and no earmarks, etc. and there are procedures for assigning responsibility, etc.) the bill would look more like… Read more »
@Brienne: Thanks for your timely and insightful response. Question: Wouldn’t the government infusion still result in government ownership of what has been private entities? Another question: What do you think the precedent that this establishes might mean for other sectors of the economy? (i.e., health care, fuel, energy, etc.) I understand the financial principles you’ve outlined above, but I am also opposed to government intervention of this magnitude in the private economic sector. I still believe that the markets are significantly overvalued and need a radical correction (some of which we saw Monday). I also wonder why the lights are… Read more »
Maybe we should all move to Alaska……..
Michael Burnss last blog post..It just keeps getting better!