“Mark to Market” Redux (Updated) 0

Also known as “fair value rules,” mark-to-market is an accounting standard that requires banks and other corporations to assign a value to their assets, such as a mortgage-backed security, based on the current market price.

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 disappeared due to the financial crisis. Uncertainty about what banks such as Citigroup Inc. are worth, they argue, is at the core of the financial crisis.

However, opponents of any changes contend that the rules are necessary because shareholders deserve to understand the troubled state of banks. Banks could provide fuzzy accounting and commit fraud without the standard, they say.

The reason that financial types want to abolish or modify the rules as regards “assets owned by troubled banks (that) have become impossible to value” is that they do not want to admit that those “impossible to value” assets can indeed be valued.

They are bleedin’ worthless.

Tell me, would you buy a share in a “securitized mortgage-based bond”?

Of course not. Neither will anyone else.

In a capitalist system (regulated or not), something that no one will buy is something that is worthless.

As soon as balance sheets are altered to show that that crap is really crap, it will be obvious that the Masters of the Universe who hung their hats on those securitized boxes of air–and their companies–are worthless. Those “assets” have no intrinsic value and are not worth a bucket of warm spit.

So of course the Masters of the Universe want to change the rules.

Lack of transparency is their best friend.

Addendum:

The Huffington Post has more.

[EDITORIAL MODE ON]

(As if it were ever off in these parts.)

Didn’t I call it? These guys couldn’t run a Girl Scout cookie stand. If they did, the customers would get home to find their cookie boxes full of air, even though the balance sheet said “Thin Mints.”

[EDITORIAL MODE OFF]