While it might be true that a rose by any other name smells as sweet, re-naming toxic assets "legacy assets" and changing the accounting treatment for sales of distressed assets seems to have changed the direction of stock markets.
Today, the same day FASB announced three changes in the rules governing how banks account for the value of mortgage securities on their books, the US and Mexican markets rose for the third consecutive day. The changes, which give banks greater discretion in reporting the value of mortgage assets, essentially allow management to value the assets at more than markets are willing to pay.
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Mark-to-Market has been blamed for either causing or exaggerating the financial crisis. But there is a reason for the accounting rule. Weakening the rule will not solve anything, and may lead to more problems in the future....
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