Bear Mountain Bull

If you don’t like the way the game is going, you just change the rules. Let the banks make up fantasy values for their assets, and PRESTO!, all our problems just disappear like magic:

The Republican Study Committee, a group of conservative GOP lawmakers, believe that instead of pumping billions to bail out banks, lawmakers could save the economy by simply eliminating controversial mark-to-market accounting rules, which require daily revaluing of assets.

I’ll bet futures and stock traders would like to see ‘mark-to-market’ rules relaxed too…

Proponents of abolishing or modifying the rules say that assets owned by troubled banks have become impossible to value, as the market for these assets have frozen up due to the financial crisis. Uncertainty about what banks such as Bank of America and Citigroup Inc., are worth, they argue, is at the core of the financial crisis.

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“Many of these oddball investments are not being traded at all,” said Willis Riccio, senior counsel at Looney & Grossman LLP in Boston.

That is because the ‘assets’ are not assets. They are worthless, you idiot. And everyone knows it, which is why no one wants to buy them. Period.

One alternative would be to allow banks to develop a model and analysis of what they believe their illiquid assets are worth and what they forecast the securities will be valued in the following quarter.

Sure. Just let them make it up. That’s how we got here in the first place — they bought the crap because someone told them it was much more valuable than it actually was.

Another approach offered by the chamber would allow banks to transfer some of their problematic illiquid securities to a special “held to maturity” entity where the mark-to-market valuation of the assets would be disclosed. With this approach, the securities — and the losses associated with them — would not be reported on the institution’s balance sheet.

Taking problematic assets off a bank’s balance sheet “sounds too much like Enron’s special purpose entities,” said Riccio.

“Some people call that fraud,” Willis said. “Anything that is fuzzy bothers me.”

Bingo. But ANY changes to mark-to-market will be fraud in my book.

We still don’t know, for sure, who owns all this garbage. Now we want to obfuscate things even further, so that we can make believe it doesn’t exist at all. Or so that we can dump it off on the sucker taxpayers…

I’m not sure that anyone should invest in a financial company ever again.