FASB Mark-to-Market

Today the FASB (Financial Accounting Standards Board) voted to ease Mark-to Market accounting rules for banks. What does that mean, you ask?

Well, it basically means that the rules for how banks report their assets (such as mortgage loans) have gotten easier. Banks can now report more value (higher dollar numbers) for the troubled mortgages they own.

This will mean that the financial statements for banks will look better, instantly. They will now have better asset values, which may allow them to loan more money. At least that is the theory.

But the reality is different. The value of these troubled assets, mainly mortgages, hasn't changed at all. They still suck. And the banks, and most investors still know they suck. So the rule change is basically a way to cover up the mess. This could allow banks to lend more money than they should. HEY WAIT - ISN'T THAT WHAT GOT US INTO THIS FREAKING MESS?!

Way to go congress (who pressured the FASB). When our banks made bad loans and got into trouble, one of your solutions was to ease their financial reporting requirements, which will allow them to loan more money against the same troubled assets.

We can't wish this away. I'm am very disappointed. Don't we have anyone in Washington that can read financial statements and understand how they relate to the real world of risk that we live in?