Inspired by Jeremy, I dug up an old Facebook tag. For those of you used to expecting distinguished and profound posts from me, you’ll be so disappointed… For those of you who know me, this will assure you that I am still not distinguished and profound. I intercepted a note in 5th or 6th grade [...]
SEC adopts (partially) mark-to-market fix
Posted By Jeff on October 1st, 2008
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 III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/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 on failing 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 Lincoln 800-352-9364
D.C. Office (202) 224-4843
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- Shane and Shane's website - 2007
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- 24 Season 5 - 2006
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October 1st, 2008 at 3:18 pm
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 a loan (as opposed to a gift) backed by the federal goverment having the potentional to earn anywhere between 8-10% profit on this money in the long term. as a CFP® with a wealth mgmt firm here i can say for our perspective (which has a vested interest in keeping over $600M in assets for our clients in growth mode), the effects of american businesses no longer having access to credit would prove to be detrimental to the economy, which is otherwise currently, contrary to what the mainstream media reports, assuredly sound. just my rambling thoughts… :) hope things are well in your neck of the woods!!!
October 1st, 2008 at 3:49 pm
@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 still on in middle America after the supposed Monday catastrophe? All the fear-mongering and hype reminds me so much of Y2K.
Maybe we should all go buy cases of pinto beans and water and stock our cellars? ;)
October 2nd, 2008 at 4:13 am
Maybe we should all move to Alaska……..
Michael Burnss last blog post..It just keeps getting better!