On the Rachel Maddow show today I saw a congressman from Texas saying he wanted to do away with the "marked to market" accounting rules. Looks like that was happened.
The marked to market rule makes financial institutions like banks value their assets on their balance sheets at their fair market value on the day they are analyzed and report and gains and losses by the end of the year. It is an acounting rules followed by auditors:
The rule forces banks to mark to market, rather to some theoretical price calculated by a computer — a system often criticized as "mark to make-believe." (Occasionally, for certain types of assets, the rule allows for using a model)
Sometimes, there is no market—not for toxic investments like collateralized debt obligations, or CDOs, filled with subprime mortgages. There are few, if any, buyers for such products. This complicates the marking process. In the absence of market information, an entity is allowed to use its own assumptions. However, when market information is available, it cannot be ignored by an entity.
wikipedia
Many of the companies having financial troubles are saying this is unfair because of limited buyers, etc. and the SEC handed them a bailout
The three-page joint statement today from the SEC and the Financial Accounting Standards Board does not do away with fair value accounting provisions altogether.
But it gives companies more leeway to employ estimates and their own judgment in many cases when they deem the market to be "disorderly" or seized by liquidity problems. It also gives companies room to determine whether the impaired value of their assets is no longer temporary, a conclusion that could trigger massive write-downs.
Regulators reminded companies today that in exchange for using more estimates and judgment, the need to disclose their methods to investors is all the more important. SEC officials sent letters reminding businesses of their obligations twice already this year, in March and September, after expressing concern that many financial institutions were using opaque measurements.
From the Washington Post
link
So it gives them "leeway" to employ more "estimates". The "marked to market" rules are what brought down Enron for overestimating the value of their assets. "Banking groups cheered today's changes, which they said had been growing in urgency because the third fiscal quarter for many companies ends today, Sept. 30." The accounting profession is leary, as it should be:
But trade groups representing audit firms and financial analysts have warned against going too far to ease accounting provisions.
The Center for Audit Quality, a coalition of 800 accounting firms, pointed out in a letter to members of Congress today that overinflated valuations only made the savings and loan scandal of the 1980s all the more "devastating when the bubble finally burst."
One less reason to trust the repugs running the country.