Doug,

Bet the farm the new accounting will increase the value of the securities beyond what the market could concievably bear.

Of course now earnings & asset statements belong in the "fiction" section. & I congratulate you on a very perceptive title to the article. This "fix" doesn't fix the problem, it just hides it from the public.

Bets on how long it takes before the new system is used fraudulently?

Just another indication of how desperate some are to hide the facts.

This new "guidance" is a license for owners of these securities to value them arbitrarily higher, isn't it?

The fundamental truth of markets is that the present value of an item is what someone is willing to pay for it, today. All else is book-cooking BS. We seem to be living out the last few chapters of Atlas Shrugged...

Market up, recession is over! Congress cancels all mortgages.
------Ok maybe not, but the market is up 485 points today and all of the sudden there's talk of the fallout from this crisis not being so bad after all. Don't kid yourself, the only reason the market is up today is because there's BS going around that the "savior of the stupid (SOS) bill" is going to pass Thursday. Don't count on it!

The bill to buy $700 billion mortgage backed securities, looks like $350 billion now with more later if needed (like they wont need it later. Come on people!), the FDIC insurance limits moved from $100k to $250k (this should have been done decades ago) and now their adding tax cuts and a "bridge to nowhere" in addition to....
continued at -------www.mortgagebreakdown.com

terrific, I guess this belongs in the 'if you can't fix it, pretend you can so it will go away category.
The Atlas Shrugged reference definitely comes to mind with this situation.
I'm a former accountant myself. Had to leave the field three years ago after becoming a whistle blower for the IRS. I learned that the Motorola spin off I was working for (I was transferred as part of the spin off) was cooking the books.
I quickly learned that its a little too dangerous to be an honest accountant these days after I started receiving death threats from proxies of the Chinese Board of directors.
They were using US accountants and subsidiary officers as fall guys for their tidy little operation that is still running today. (IRS/Justice couldn't touch them as their assets are all in China)
That said, I think that The CIT Group is going to be one of the next institutions to go as commercial credit gets tightened down. That ironically will kill my former company as they use The CIT Groups factoring arm to launder money out of the country.
Maybe one of the ironies of this crisis is that a little failure can go a long way to kill a lot of corruption.

Doesn't this actually set the system back a few years? In all honesty the problem was exascerbated because of these accounting standards, but I, for one, believe it is a necessary evil.

Faulty risk management, or lack thereof, is the crux of this debacle, not mark-to-market accounting or short selling.

It has been my opinion for years that the FASB is getting too powerfull as their decisions can often reach far beyond their intended areas of responsibility and don't really clearly and understandably tend to solve much of anything but rather make companies spend a fortune in fees to get their best estimates of unkown future consequences and keep updating those estimates, restating, etc. in their financial statements. Often you see companies negatively restating financial information backwards for years because of a ruling. This keeps the big fees rolling in. (If you read Proxy Statements you will see acounting fees often grow faster than anything else, that is other than executive comp.) But it doesn't help the guy on the street who lost money. He can't get it back from 3 years ago. If you think it is bad now wait a few years. As we approach "uniform world financial regulations" you haven't seen anything yet. I agree there should be some degree of conformity in accounting, but many of their rules and regulations, which must be adpoted by public companies or else, are rediculous and can and do strangle a compny and often for no valid reason at all.

DOW Down 777 points Monday, DOW Up 485 points Tuesday. What is the big problem? 200 economists say NO Bailout! Majority of the people are saying NO Bailout. Credit has not stopped, it just cost more (and it cost no more than it did before this insanely easy credit). They are voting tonight on allowing business to set the values of the assets on their books. by removing an accounting rule that says assets should be valued at current market prices. I don't know about you, but this sounds insane! Does anyone know the idiot that came up with this idea.

For once, It would be nice if our government could focus on the task on hand and stop adding things to this bill.

The idea came out of the Republican's congressional research group.

There is no perfect way to value an asset, including the "what a willing buyer will pay today". So it is not insane to suggest cutting the rope to an anchor that is puling your canoe under.

JCH, allowing companies to overstate asset values will create a problem in trust. I'm not going to invest in a company that overstated assest values, are you?

I'll bet they use the new changes to boost their bottom line and their year end pays & bonuses.
Want to bet!

What a crock this new sweetened bail-out plan is. Same old crap coming out of Washington. It was the lack of accountability and greed that caused this meltdown of the financial system in the 1st place. Hmm, let's losen the rules some more and see what happens. Now that every one has added their two cents worth to this bail-out plan, including raising the FDIC cap from $100K to $250K only protechs the upper middle class not the real working middle class. More tax breaks too, that a real no-brainer. Let's focus original plan without all that added sugar.