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[17 Mar 2009 | No Comment | ]

 Last week was a very good week for those who believe in the US economy.  The stock market bounced off a new low, and while they have yet to capitulate, short-sellers are definitely on the run.  Two developments put the pessimists on the defensive.  Number one – velocity has apparently returned.  Number two – overly strict mark-to-market accounting has finally come under attack by Congress.
   The early signs of a revival in velocity were evident a couple months ago, before a dollar of new government spending got out the door.  …

Chicago, Featured, Headline, Think Tanks »

[11 Mar 2009 | No Comment | ]

Maybe if Warren Buffett says it, Washington will finally listen.
The Omaha oracle, in his appearance this morning on CNBC, called for suspending mark-to-market accounting for purposes of determining whether banks meet regulatory capital standards. He also argued that with sweeping guarantees of depositors and bondholders in place, there’s no need for government capital injections: Banks should be allowed to earn their way out of trouble based on the princely spreads now available, which they can readily do.
Read More at the Club for Growth

Featured, Headline »

[10 Mar 2009 | No Comment | ]

Buried deep in the bowels of the NY Times this past weekend, Ben Stein had a few remarkable ideas:
1) End Mark to Market Accounting
2) Revive the Uptick Rule
3) Reduce speculation on Credit Default Swaps
each of which should lead to reduced volatility in financial stocks. As Stein puts it
“Now, some of the decline in the financial markets is occurring for a very good reason: real concern about profits and coupon payments. But some of it is simply a result of the internal workings of the markets, which are pushing securities …

Local Media »

[7 Oct 2008 | No Comment | ]

Martin Sullivan, former chief executive of AIG, the insurance giant that was rescued by the US government, on Tuesday blamed a single accounting rule for the company’s travails.
In written testimony released before he was set to testify before Congress, Mr Sullivan said that “multiple actions by multiple parties” created the “unprecedented financial market disruption” that caused his firm’s near-collapse and eventual $85bn bail-out by the US Treasury.

Featured, Headline »

[16 Aug 2012 | No Comment | ]

When Mitt Romney chose Rep. Paul Ryan as his running mate he guaranteed that the 2012 presidential race will be about two opposing economic philosophies.

Not even 1980 had such a clear choice. The economy was in recession with double-digit inflation – people demanded change. It’s true that Reagan spoke about getting government off our backs, but President Carter had cut the capital gains tax rate and deregulated both trucking and airlines. Senate Democrats, who ran the Joint Economic Committee, published a report called “Plugging Into the Supply-Side.” Reagan altered the …

Featured, Headline »

[28 Jul 2009 | 2 Comments | ]

Apparently, public policy hath no fury like a CPA scorned.
In late 2007, the Financial Accounting Standards Board (FASB) imposed mark-to-market accounting on the US financial industry.  This required financial firms to value securities at market prices, and then account for any gain or loss as a change in regulatory capital.  Within a year, the US was in the middle of the worst pure financial panic in a hundred years.  Coincidence?  I think not.
On its surface, market-to-market or “fair value” accounting makes some superficial sense.  Markets usually provide transparent and verifiable …

Chicago, Featured, Headline, Think Tanks »

[2 Apr 2009 | No Comment | ]

We’ve railed against Mark to Market Accounting for 9 months.
Bloomberg announces it this morning.
The Financial Accounting Standards Board, pressured by U.S. lawmakers and financial companies, voted to relax fair-value rules that Citigroup Inc. and Wells Fargo & Co. say don’t work when markets are inactive.
The changes approved today to fair-value, also known as mark-to-market, allow companies to use “significant” judgment in valuing assets to reduce writedowns on certain investments, including mortgage-backed securities. Accounting analysts say the measure, which can be applied to first-quarter results, may boost banks’ net income by …

Featured, Headline, Local Media »

[19 Mar 2009 | One Comment | ]

President Obama is huffy about AIG employees receiving $165 Million in (contractually obliged) bonus money. The bonus payments amount to 1/1000 (.1%) of the money going to AIG, but the White House and Congress are enraged by the thought of people getting paid. The New Leader of the Republican Party, CNBC’s Rick Santelli, is especially numerate, and would like people to consider objecting the the other 999/1000 of the bailout rather than just the AIG bonus.
Our Dennis Byrne consults his brother, who speaks with much wisdom saying “to …

Featured, Headline »

[11 Feb 2009 | 3 Comments | ]

For several months now, the Chicago Daily Observer has been running a series of stories and advocacy pieces stating support for a change or relaxation in Mark to Market accounting. For some background, we started here and have kept is up just this Monday with another article from Brian Wesbury explaining the relation of accounting regulation to the bailout.
Obscure, technical, and not very exciting…how can a seemingly common sense regulation be causing such mayhem? I’ll summarize here. In any finance or MBA course, students are taught that the …