Mark to Market

Mark to Market:

Eliminating this rule was done so banks would not have to write-down the value of their assests. Also known as the millions of homes they own because they gave loans to people who couldn't really afford the house and loans that were for more than the house is really worth. Writing down the value of these assets showed the world just how vulnerable these banks were and how risky the bets they had made really are.

What the SEC has done was just camoflage how bad the balance sheets of these banks really are. They have done exactly what they are supposed to stop. The reason we have accounting rules for publically owned companies is so shareholders can see the true value of the company in which they are investing. Eliminating mark to market has just made the banks look much stronger than they really are. They no longer have to show the losses they are taking or expect to take on the risky loans they have made. We have just introduced a huge shell game of confidence into the stock market on a level never seen before. All the SEC and Obama adminstration has done is told everyone the banks are wearing clothes.

My guess is that the Goldman Saks and Morgan Stanley's of the financial world will buy the profitable parts of Bank of America, Wells Fargo, and Citi when the losses really start to mount. The tax payers will be left with all the toxic assets at the end of the day while these other banks will reap huge profits. Since they will be the only game in town, they will enjoy a nice monopoly and we will suffer for it as a result. Think the new fees and terms are bad now? Wait until there is no competition!