Transcripts

"Two Ways to Play"-Kevin Depew of "Minyanville."

SUSIE GHARIB: Will changes to mark-to-market accounting rules help get us out of this recession? There are two ways to answer that in tonight's "Two Ways to Play." Here's "Minyanville's" Kevin Depew and Kevin Depew of "Minyanville."

KEVIN DEPEW, EXECUTIVE EDITOR, MINYANVILLE.COM: The Financial Accounting Standards Board, known as FASB recently agreed to relax so- called mark-to-market rules, giving banks far more leeway in valuing distressed securities on their balance sheets. With all the toxic loans on the books of financial institutions, the requirement to value these assets at current market prices has been nothing short of disastrous. Why? Because there hasn't been a market. It's as if an 800 pound gorilla has been standing on the chests of banks, not allowing them to breathe. Relaxing mark-to-market rules has removed that gorilla. OK I agree, there's an 800 pound gorilla in the room, but it's not mark-to-market accounting. It's the absolute refusal by banks and policymakers to accept responsibility for bad decisions, choosing instead to privatize gains and socialize losses. Let's be honest, the intent of the FASB change is to delay loss recognition with the hope that a future economic recovery will somehow save the day. This shouldn't be surprising. Since this debt crisis began, decision making by policymakers has been characterized by one thing: a mindless disregard for the costs that must one day be borne by our children and grandchildren.