From Realtor Magazine Online, Daily Real Estate News December 12, 2008
Some financial professionals have blamed the economic meltdown on accounting procedures known as mark-to-market rules, which require that banks value the assets on their balance sheets at current market prices, even if the assets aren’t likely to be sold.
Mark-to-market critics have called for a revision in these rules.
Securities and Exchange Commission Chairman Christopher Cox says that would be a mistake.
“[Accounting rules] aren't just another financial rudder to be pulled when the economic ship drifts in the wrong direction," says Cox. "Instead they are the rivets in the hull, and you risk the integrity of the entire economy by removing them."
Instead, "We must endeavor to continue to develop robust best-practice guidance for auditors and preparers – particularly for fair value measurements of securities traded in inactive markets," Cox said in his address to the American Institute of Certified Public Accountants.
Source: The Associated Press, Marcy Gordon (12/08/08)
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