I couldn't believe what I heard. While there is something to argument that the "marks" are not quite right as part of the problem is that nobody wants to put an actual offer to buy these instruments, it would foolhardy to not mark them to market. To suggest as one congressman did to mark them at face value would be nothing more than accounting fraud.

I'm sympathetic to the plight that marking to market causes. I've suffered the adverse consequences of this myself as an energy trader as the markets can and do overreact. I've been forced to close positions that I did not want to close. However, if I could get away with telling my boss, "I know I can only sell it for X, but lets put it on the books as Y" Me, My boss and the risk manager should and would be fired. The market is not always rational, but it is always right. How can it be suggested that you value something on your balance sheet at something other than what the market will pay for it. To mark them at something higher would only encourage more reckless risk taking.

If only the market could arbitratily set the "value" of their dubious derivitives, this would be fine? Apparently these people think the problem isn't a stunning lack of liquidity in the increasingly imaginary money market, it's the stunning inability of these companies to legally create value with a stroke of the pen.

Add to that the "toothless" nature of the oversight provisions. Not that we should be surprised. The dems are the most supine bunch of sycophants to along in over two hundred years of American governance.

Then again, what's the point of putting good provisions in the bill? The Idiot Child Emperor long ago staked out his claim to erase them with a signing statement, and our invertebrate legislators let him do it.

The Dems should let the system crash. Bring the entire financial market back to a point where money needs to mean something. We must take finance out of the realm of the imaginary and make it real again.

I just can't find words to ridicule this idea as harshly as it deserves. It's like saying I can double my net worth just by overvaluing my home.

Sounds like a Ponzi scheme that doesn't even have new money coming in. It just says "We have more money", growth may resume.

David Copperfield would be proud.

Mark to market is an important thing to do to have an accurate image of the value of a company assets in an orderly market place where the value of securities can be reasonably determined. The market is not currently orderly. The mortgage backed CDOs are currently almost worthless in the marketplace when, in fact, they have worth because, while the default rate for mortgages is much higher than historical standards, it's not 100%. Deleting the FASB rule would probably be suboptimal but suspending it for firms with hard to value securities would be a good thing.

I suggested to a friend last night that the solution to the problem lay in offering the hedge funds and investment banks the opportunity to come under Fed supervision (the rules would have to be different than for deposit banks but still...) and have them pay their dues to the FDIC. The Fed would then guarantee their accounts up to some limit (as with deposit banks) but most importantly, the Fed would temporarily turn a blind eye to the real value of these CDOs and accept them at face value. Then, during the regulatory review process, the Fed and the investment houses would gracefully write down the values of these instruments so that whatever the appropriate hit to the value of these instruments would be spread out over time.

If they didn't want to join the Fed, fine. No bailouts. If you've been exercising fiduciary restraint and are in good shape, fine; continue as is. If not, you'll be a footnote in a history book.

We've got a choice here. Either we unblock the credit markets or things spin out of control.

So, do one of the following:

1. Allow the federal government to make direct loans. Hey, the Farmers Home Administration does it, the Small Business Administration does it. So -- direct loans to homeowners. They pay off the banks, and that ends the credit mess. To pay for the program, tax the banks.

2. Take over the banks and do the same thing through them. That's what the Swedes did in the early 90's. They didn't take them over wholesale, but the government got a big say in what the banks did.

Sound too much like socialism? Well, you got a choice here -- see above.

It's certainly true that the provisions regarding exec compensation, past paid bonus dollars, and other "populist-themed" additions to the bill were not 100% rigidly specified, and were thus "at the discretion" of the board of the bailout fund, what was important about them was the THREAT that the businesses asking for bailout money might possibly be subject to those requirements.

An upside to that approach is that the only companies which would want to apply for the money would generally be on death's door, financially. No management structure is going to ask for money if there is the perception that the guys would lose their PAYCHECKS.

As for the notion that mark-to-market is "the problem," that's like looking at only one half of the system that is collapsing.

Mark-to-market aggravates the conditions when over-leveraged companies begin to run into cash-flow problems, but it doesn't cause them to become overleveraged in the first place.

Nope, that was done by simple greed.

The idea of further deregulation to fix this is ridiculous.

I'm very glad this plan failed. I hope plans written by and for Wall St. keep failing.

Maybe this rejection will provide impetus for including other ideas (such as the direct loan another commenter mentioned above) to be included in a future bill.

I agree something has to be done, but anything proposed by Shrubby & Co. should be presumed fraudulent, impotent, or both.