There was a piece on NPR this AM about how the
Mark to Market rule is being being blamed by some for the current economic mess.
I don't see it this way; without the MTM rule, it seems companies could value a truckload of turd pies at $1M/lb and nobody outside the company would be the wiser. The person NPR had on defending the rule basically said it was a pain in the ass as the value of a company's assets/liabilities would unnecessarily fluctuate as the market rose and fell. Hell, that's
exactly what I would want to see!
If someone wants me to loan them money and use their Yugo as collateral, I'd expect to use the current market valuation ($3.50), not their own pie-in-the-sky assessment that it's a "collectors car" worth $500k @ BJ.
So now, the powers that be are contemplating suspending the rule. Translation: CDSs and MBSs which currently aren't worth the electrons they're printed on will have a book value of trillions.
To me it seems like an attempt to sweep some stuff under the rug.