Huffington Calls Suspension of Mark-to-Market Accounting 'Absolutely Tragic'

NewsBusters ^ | April 6, 2009 | Jeff Poor

[Rufus2007]

She's been popping up in a lot of places lately to chime in on the economy.

This time Huffington Post editor-in-chief Arianna Huffington appeared on ABC's April 5 "This Week," where she voiced her disapproval of the March 30 decision by the Financial Accounting Standards Board (FASB) relaxing mark-to-market accounting rules.

"This week, we saw so many concessions to the banks," Huffington said. "We saw the suspension of mark-to-market, which is absolutely tragic. Japan, by not having mark-to-market, made it much harder for them to recover."

But as Brian Wesbury and Robert Stein of First Trust Portfolios recently wrote for Forbes magazine, mark-to-market accounting reinstitution was reinstated only in recent years. The last time it was in effect - during the Great Depression - it caused many bank failures.

..more (w/video)..

[Rufus2007]

Why are lefties so adamantly opposed to suspending mark-to-market accounting, even just temporarily? Just because people on the right are for it??

[facedown]

Because it facilitates government takeover of all financial institutions.

[ConservativeMan55]

bttt

[rwfromkansas]

I have heard Freepers in favor of mark-to-market and Freepers against it. What does it really do...I just don’t know even after trying to read articles about it since each one describes it differently!

[Mr. Lucky]

“Mark to market” requires that a company revalue the collateral it holds to reflect the current fair market value of the assets. It’s leftist supporters not withstanding, it’s a sound practice.

[Rufus2007]

Steve Forbes explained it on Huckabee over the weekend...

It’s like someone telling you that you had to sell your house in the next 10 minutes. You probably wouldn’t get much for it on such short notice - and it is marked on your books to that value.

[mnehring]

Basically, it is called ‘fair(sic) market accounting’.. To the uneducated, it sounds good, it requires that banks value assets for accounting purposes at ‘fair market value’ at the time. Where this gets really convoluted is who is to decide what is fair market value. This also is almost the legalization of keeping two sets of books because what an accountant may consider ‘fair market value’ is considered a different value for taxation purposes. It also hurts banks who invest in from scratch development projects. Let’s say that they invest in building a new $500Million skyscraper. For accounting purposes, that skyscraper isn’t worth the end value until it is complete. While under construction, it may only be valued by some government accountant at a fraction of that value. HOWEVER, in regards to property tax, it is taxed at full value.

[mnehring]

A much better and simpler explanation than mine.

[y6162]

Arianna Huffington = Soros slut

[dennisw]

Huffington? What the heck does she know? She’s as untutored as her messiah 0gabe

[LeonardFMason]

Husband was HOMOSEXUAL and she had NO CLUE. NO CLUE is the operative phrase for this windbag.

[dalereed]

Who cares what that european communist has to say?

[Dallas59]

Unbelievable that “they” would have this woman commenting on anything. When she’s on...you can see in the faces of the other commentators who actually know what’s happening...what they think of her.

[dalereed]

“HOWEVER, in regards to property tax, it is taxed at full value.”

There are no property taxes on the building until the notice of completion is filed, at least in California.

[Steel Bill]

What this does is let the banks set prices for the toxic assets that will be purchased in Geithner’s little public/private partnership scheme. They will hide this little deception behind the good it will do by setting a floor in housing prices.

[Loyal Buckeye]

Arianna Huffington said that? What a ding bat; she would know mark-to-market accounting if it bit or on her *ss.

[madinmadtown]

She is funded by Soros. Of course, she is going to say whatever he tells her to say. She has a natural affinity to men with money. Money seems to be the only quality that she looks for in a man. Whether it is fifty dollars or several million dollars, it is just a matter of negotiation once one establishes that the woman can be bought.

[SAJ]

MTM accounting is appropriate, and a useful valuation tool, for assets that are freely and frequently traded, as for instance the futures markets. MTM is utterly inappropriate -- and worse, completely misleading -- for valuing illiquid and infrequently traded assets, as for instance a commercial real estate property.

What is needed for illiquid assets -- even private home mortgages -- is a rolling average of similar property prices over, say, 3 years. Might need to use 5 years for commercial property.

Why? Because strict mark-to-market, as now practiced, says effectively that, if there is no bid for a given asset today, then the ''correct'' (haha) mark for that asset is zero. This is of course patently nonsense; even if there is no bid for, say, a strip mall today, the real estate and the structures and appurtanances are clearly worth well more than zero.

MTM is being abused (gee, what a surprise!) by the Kenyan and Turbo Tax Timmy as yet another behaviour-control mechanism.

[SAJ]

See post #18.

[FreepShop1]

She’s right.