March 12 – Mark-to-market accounting rules require banks, insurance companies and other financial institutions to value their assets at the current market price, even if the assets are not going to be sold right away or if their true market value cannot be determined. During market turmoil, financial institutions are forced to write down the value of long term, non-trading assets below their true economic value, which hinders banks’ ability to make loans to consumers and businesses. In a recent Wall Street Journal op-ed Steve Forbes claims that, “mark-to-market accounting is the principal reason why our financial system is in a meltdown.” Congressman Zach Wamp issued the following statement encouraging the Security and Exchange Commission (SEC) to modify mark-to-market rules:

“The SEC should modify the fair value accounting rules that the Bush Administration approved in the fall of 2007. These mark-to-market accounting rules were well intended, but have the unintended consequence of making economic downturns worse. We need to take a harder look at these accounting rules as we work to strengthen the financial sector and provide new guidance on how assets should be valued. Revised accounting rules are needed to help get us back to a solid financial footing where banks aren’t afraid to make loans, where families can have access to money to meet their financial needs and where small businesses can receive funds needed to meet payroll and expand. After all the money that has been borrowed and thrown at the financial institutions over the last six months, it is very unfortunate that we still do not have the desired result of consumer access to capital. The Treasury, the Federal Reserve and the SEC must make common sense changes to help spur economic activity before it is too late.”