Daily Flog: Wall Street's little piggies don't want to go mark-to-market; meanwhile, more huffing and puffing
The Senate grabbed hold of the Cash for Crash bill and finally came up with a workable version — one that may work for the Wall Street crapshooters but likely not for the rest of us, who are simply loaded dice in the palms of their hands.
Part of the complex maneuverings supposedly aimed at keeping the country from sliding into Great Depression II revolves around "mark-to-market accounting" of the assets that Wall Streeters have played with to the point of, literally, no return.
Yeah, like you, I have only a hazy understanding of this. Those who are financially alliterate are welcome to read this morning's New York Post story "PIGGY POLS IN HOG HEAVEN WITH PORK-PACKED PACT." Daphne Retter's funny, funky take brings a little light to an otherwise dark day of journalism:
More to the point of your financial future and such no-longer-arcane topics as mark-to-market accounting, lower your eyebrows, peer through this morning's financial fog and try to grab for this guidepost: Bankers and conservative Republicans (including former anti-populace populist Newt Gingrich) favor the abandonment of mark-to-market accounting rules. To which auditors, big investors, and consumer groups reply, "Are you out of your friggin' minds?"
Think of it like the nursery rhyme that goes, "This little piggy went to market . . .", and add some huffing and puffing by wolves that may eventually knock down millions of American homes.
In the present case, these little piggies went to mark-to-market, and now they want to remove that accounting rule so they can instantly wipe out their losses on the books and resume playing their Neverland gambling games with our money.
In essence, the new Senate version of the bailout bill would let Wall Streeters lie even more about the value of the assets they're trading and set us up for a rerun of the Enron scandal.
That should help things.
Or maybe the financial system is so fouled up and so wedded to its inherently corrupt trading instruments and practices that abandoning mark-to-market accounting really would help restart the credit markets and protect you from foreclosure.
And where has Wall Street's mayor, Mike Bloomberg, been in all this? I pointed to Bloomberg's culpability on September 23, and now the New York Times is dipping its toe into the topic. The Times, of course, is making excuses for him. See this morning's "Mayor’s Stewardship Is Mixed, Fiscal Experts Say."
Enough on Bloomberg and more on the important mark-to-market piece of the corporate-bailout bill below, but first . . .
NO PARTICULAR ORDER:
Wall Street Journal: 'Fed Considers Rate Cut as Recession Fears Mount'
Slate: 'How to Debate a Girl, and Win' (Dahlia Lithwick)
N.Y. Times: 'Stopping a Financial Crisis, the Swedish Way'
N.Y. Times: 'Surveillance of Skype Messages Found in China'
N.Y. Post: 'MOB-CORPSE DIG'
N.Y. Times: 'Studios Sue to Bar a DVD Copying Program'
Wall Street Journal: 'Bombs Hit Shiite Worshippers in Baghdad'
Wall Street Journal: 'Analyzing the "Twelve Tribes of Politics" '
Agence France Presse: 'Enron-era accounting reforms blamed in financial crisis'
Far Eastern Economic Review: 'The Great Crash of China'
Back to the dust-up over the new bailout bill's endorsement, in effect, of abandoning mark-to-market accounting:
Over at consumerwatchdog.com, John R. Simpson issues a fire-and-brimstone warning: "New 'bailout' tactic would let fat cats cook books."
Stirring the pot, today's Wall Street Journal story "Momentum Gathers to Ease Mark-to-Market Accounting Rule" explains things pretty well. Elizabeth Williamson and Kara Scannell craft a succinct lede:
It would just further cloud matters for me to try to paraphrase this, so here's how Williamson and Scannell lay it out:
As Bloomberg's Jesse Westbrook reported Tuesday, conservative Republicans might very well have supported the House version of the bailout bill if the SEC had suspended mark-market accounting rules.
For background, see "Auditors Resist Effort To Change Mark-to-Market," in Tuesday's Wall Street Journal, in which Judith Burns wrote:
Let the staggeringly diverse gaggle of opponents of abandoning mark-to-market accounting speak for themselves. This is what they told the WSJ's Burns and Bloomberg's Westbrook:
Still unclear? In NPR's "Senate OKs Bailout Package, House to Vote Friday," Dina Temple-Raston tries to explain:
That's reassuring that our lawmakers — like pro athletes and philandering pols — want to pull out the hackneyed reasoning to say that all they want to do is get their past mistakes "behind them." In real time, however, the train is still hurtling down the track toward us.
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