[wideawake]

First, they reference "mark-to-market" accounting standards. That means they wanted to do away with "fair value" (i.e., true value) accounting standards? They wanted to inflate the value of mortgages so as not to destroy their balance sheets?

Exactly the opposite.

"Fair value" does not mean "true value" - there is no such thing as "true value."

The value of an asset is what someone is willing to pay for it.

"Fair value" is an estimate by accountants as to what the price of an asset should be.

"Mark-to-market" is pricing an asset according to what someone has actually paid for it in the market.

"Fair value" accounting inflates asset prices. Marking them to market doesn't.

[count-your-change]

Exactly. As they say on late night t.v., “A $100 value, yours for only $19.95!”.

[haroldeveryman]

The value of a price and lot is always subjective. But assigning a “fair value” of a lot by an unvested third party is arbitrary. For example, one of the New England states (I think Vermont) adds a “view tax” to the real estate tax on a house when some county inspector notices that it has a nice view. But the market value (what the owner paid for it) would have automatically priced this in.

Gary Schilling (Forbes Magazine house expert)thinks that “Mark to Market” is the valid way to price a property.