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FASB Eases 'Mark-to-Market' Rules

Discussion in 'Economics and Financials' started by Vengeful Odin, Apr 2, 2009.

  1. Vengeful Odin

    Vengeful Odin Norse Mod

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    http://online.wsj.com/article/SB123867739560682309.html

    This may seem like a small decision to a lot of folks out there, but this practice of allowing companies to value their own assets causes me quite a bit of concern. Not surprisingly, it's not getting a lot of play.

    For those of those unfamiliar, this type of loophole was previously abused, most notably by Enron, which led to the "cooked books" that ultimately led the company into bankruptcy. The reason for this was that Enron valued their assets at a "predicted" rate, rather than current market conditions, which in turn allowed them to report massive profits that didn't really exist, and never actually materialized.

    I'm concerned because we're in an economic climate that's a direct result of less oversight, and now we're turning over the reigns in terms of value back to the companies themselves.

    Seems a bit like letting the wolf guard the chicken coop, at least to me.

    EDIT: Mods, if this falls under the category of PoFo, feel free to move. Wasn't sure which forum to put this in.
     

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