The Corner

Mark Up

The Wall Street Journal writes in its editorial endorsement of the bailout:

Another misconception is that the credit problem will vanish if only Treasury suspends “mark-to-market” accounting — as if those bad assets wouldn’t still exist. The banks themselves would know they still have this bad paper and aren’t likely to engage in much new lending. Investors also don’t trust the bank marks now; imagine what they’ll think if the U.S. declares that cooking the books is official policy. Mark-to-market has surely contributed to this mess and needs to be revisited. But to toss it aside wholesale now would risk turning banks into the zombies of Japan’s lost decade. 

 

I don’t believe that “toss[ing mark-to-market rules] aside wholesale,” or even suspending them altogether, is a good idea. But I don’t think the Journal’s criticism applies to First Trust’s proposal to suspend mark-to-market accounting for “structured (Tier 3) assets issued between December 2003 and August 2007.” As for “cooking the books,” commercial banks are already able to use hold-to-maturity pricing. Isn’t that a large part of the reason investment banks have been converting themselves into commercial banks?

Ramesh Ponnuru — Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg View, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.

Most Popular

U.S.

The Media Fell for Elizabeth Warren’s Spin

Do you want to know what media bias looks like? Earlier today, Massachusetts senator Elizabeth Warren released DNA test results that confirmed that she misled employers, students, and the public about her Native American heritage for years. Bizarrely, all too many members of the media treated the results as ... Read More
Culture

A Free People Must Be Virtuous

Dear Reader (Even those of you who didn’t seem to notice or care that I failed to file this “news”letter on Friday), So I’m sitting here at Gate C6 at O’Hare waiting for my flight home. I am weary, pressed for time, in desperate need of a shower, and filled with a great sense of dread for the work ... Read More
Politics & Policy

The World Keeps Not Ending

We were not supposed to have made it this far. George Orwell saw night descending on us in 1984. Orwell was, on paper, a radical, but in his heart he was an old-fashioned English liberal. He dreamed of socialism but feared socialists. He feared them because he knew them. I was in the sixth grade in 1984, but I ... Read More
PC Culture

‘White Women’ Becomes a Disparaging Term

Using “white men” as a putdown is no longer extreme enough for the Left. Now it is moving on to doing the same for “white women.” How rapidly this transpired. It was less than two years ago that the approximately 98.7 percent of white women working in media who were openly rooting for Hillary Clinton ... Read More