[Pen-l] Mark-To-Market or Marching to Wall Street's Drummer?

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

Congress coerced financial regulators to let Wall Street redefine the 
way it measured profits -- allowing the big banks to show profits and 
pass the highly vaunted stress test. In the next post, I will indicate 
how effective this technique has been in creating an illusion of 
profitability. Then in a third post, I will offer some more comments.

Pulliam, Susan and Tom McGinty. 2009. "Congress Helped Banks Defang Key 
Rule." Wall Street Journal (3 June): p. A 1.
http://online.wsj.com/article/SB124396078596677535.html

"Not long after the bottom fell out of the market for mortgage 
securities last fall, a group of financial firms took aim at an 
accounting rule that forced them to report billions of dollars of losses 
on those assets. Marshalling a multimillion-dollar lobbying campaign, 
these firms persuaded key members of Congress to pressure the accounting 
industry to change the rule in April. The payoff is likely to be fatter 
bottom lines in the second quarter. The accounting issue lies at the 
heart of the financial crisis: Are the hardest-to-value securities worth 
no more than what the market is willing to pay, or did the market grow 
too dysfunctional to properly set values?"

More at

http://michaelperelman.wordpress.com/2009/06/08/mark-to-market-or-marching-to-wall-streets-drummer/

--

Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901
www.michaelperelman.wordpress.com



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