It is just a regular hearing

A House Financial Services subcomittee has a March 12 hearing on mark-to-market rules. This news has been welcome and may have too high expectations on the Market movement. Yes, indeed if it were passed, all banks would immediately enrich or inflate themselves. All companies are required by the SEC to file their values by "mark", which means the assets on its books based on the price if they were sold today. This is the mark-to-market rule.

The practice of mark-to-market spread to big banks and companies in 1980s. And in 1990s the rule had caused accounting scandals. Enron is the representative case. Mark-to-market is also used by IRS for taxation purpose.

In this downturn, mark-to-market has been accuse of the main cause because many companies' asset has vanished quickly on their balance sheets. Out of them, the mortgage back assets became a hot water bed. So their mark-to-market value turns into fire sales if they were sold today. Citigroup is the representative out of this case.

Banks argue that they are actually running profitable and shouldn't be judged by the mark-to-market value since they are not in danger of selling themself now. But the existence of the rule is more than evaluate a company's value. It gives an insight about the company's health. Without it, banks and companies can easily inflate themself by arbitrary multipliers. We need more regulations rather than relaxation after careless housing bubbles. So it is just a pose rather than any solid action. Even Rep. Paul Kanjorski said this, "Illiquid markets have resulted in great difficulty in valuing sizable assets. Some have therefore complained about fair value accounting and sought to eliminate it. While companies need stability, investors still need accurate information. We therefore cannot allow for fantasy accounting that wishes away bad assets by merely concealing them.”

So don't expect too much. If there is a rally, that is a sucker's rally.