The Mark to
Market Rule.
Instruct Rating
agencies to re evaluate assets.
The SEC Mark to
Market Rule and the poor asset
valuations by ratings agencies
are responsible for the credit
crunch.
Much of the
meltdown can be attributed to
the SEC’s Mark to Market Rule.
The Mark to Market accounting
rule valuates assets like
mortgage backed securities based
on what the market will bear for
these assets.
Currently,
financial institutions are not
buying many types of asset
backed securities due to
concerns as to their valuation.
It’s a similar concern to the
one homebuyers have about the
value of real estate.
Basically,
neither believe what they are
buying is worth or will be worth
the price paid.
Financial
institutions are forced to sell
their assets at 25 to 50 cents
on the dollar, when in fact
those assets are worth very
close to their original values.
Eliminating the
Mark to Market rule would stop
the bleeding for financial
institutions and if done, will
be responsible for a strong
stock market rally of 1000 to
2000 points on the Dow.
Rating agencies,
also responsible for the credit
crunch must be instructed to re
evaluate these assets.
Stop the guess
work. The only way to get an
accurate valuation of these
assets is to re evaluate them.
Financial
institutions would regain
confidence in the valuation of
these assets and would become
buyers of these assets once
again.
