March 12th: Balance Sheet Amnesty Day?

What’s the story with March 12th?

Basically, the thinking out there goes something like this.  Congress is planning to take a look at possibly easing the Mark-to-Market accounting rules, giving US banks a fighting chance at making it through this period.

From the Washington Post:

A House Financial Services subcomittee has scheduled a March 12 hearing on mark-to-market accounting rules — a dry-sounding topic that likely would have a massive impact on the struggling big banks and the wider economy if it were altered.

The argument against easing M2M are based around the fact that lax oversight and regulation is exactly what got us into this mess to begin with, so essentially, easing regulation further would be a bit like consuming “hair of the dog” when you have a hangover.

The arguments for, amidst the cacophony, are centered around the observation that “you can’t mark something to market if there is no market”.

Simply put, mark-to-market accounting rules, enforced by the SEC and the government’s designated accounting oversight group, require a company to value — or “mark” — assets on its books based on the price they would bring if they were sold today.

Many market watchers are predicting an explosion higher in bank and real estate stocks along with the overall market if relief comes their way in the form of relaxed marks.

I haven’t formulated a strong personal opinion on this one yet.

Full Story:  House Panel Sets Hearing on Mark-to-Market Accounting (WaPo)