"Authorities in the U.S. and abroad are focusing on what they now believe is the core problem: the massive destruction of capital caused by markdowns of troubled assets. Restoring this financial raw material is crucial to economic growth", James Cooper at Businessweek, 27 October 2008.
"Mark to market is a business rarity--an accounting term that draws reactions from people who don't know spreadsheets from bedsheets. Mark to market, which we'll call MTM, evokes images of Enron's made up profits and the other corporate scandals that marred the first years of this decade. Not pretty. ... Accountants argue that MTM--known formally as Financial Accounting Standard 157--is fine, although the Financial Accounting Standards Board has agreed to tweak it some. ... This week the [SEC] is scheduled to hold a high-profile public meeting about MTM. ... The guy who got 133 into the bill, Representative Spencer Bachus (R-Alabama), the ranking minority member of the House Banking Committee, told me he wasn't trying to politicize accounting. 'It just say, "Study it,"' he told me. "It doesn't say [to do] a study to repeal it. It doesn't say [to do] a study to suspend it.' ... Second, it a little-noted move, regulators allowed banks with losses on some Fannie Mae and Freddie Mac securities to treat the resulting tax savings as tier one in their regulatory statements for the third quarter. ... How often has my source for this nugget--accounting guru Robert Willens of Robert Willens LLC--seen such grandfathering in his 40-year career? 'Never,' he says. ... It's easier to blame accountants for your problems than to admit you made your institution vulnerable by overleveraging its balance sheet and buying securities you didn't understand", Allan Sloan at Fortune, 10 November 2008.
It's Uncle Sam's job to enable banks to cook their books. Bank stock buyers, beware.