The Dow Jones and other stocks are struggling upward. Does Obama get credit for that? Not quite.
Readers of my ABCNews column or Wall Street Journal opinion pieces will remember that I’ve regularly listed four things that needed to be done to improve the U.S. economy. Now the first one has fallen: mark-to-market accounting.Today, under pressure from both lawmakers and financial institutions, the five-member Financial Accounting Standards Board - the arbiter of accounting rules in the U.S. - voted unanimously on new guidance for mark-to-market. Mark-to-market accounting, instituted in 2007, but given real punch by FASB and the SEC in a "clarification" last September, has been called the single most important reason the stock markets crashed so abruptly last fall. It all-but forced corporate auditors to set the most conservative valuations on the holdings of financial institutions - and in the process led to massive mark-downs and the collapse of the capital markets.
The new mark-to-market changes let companies use "significant" judgment in determining the prices of some investments on their books, including mortgage-backed securities - a move that could help banks reduce their write downs and boost net income. Better yet, FASB has fast-tracked the matter, meaning that financial institutions will be able to apply the changes to their first quarter results.
Nobody has fought louder or more brilliantly for the end of mark-to-market than Steve Forbes, Forbes' publisher Rich Karlgaard, and CNBC's Larry Kudlow. They deserve everyone’s thanks - especially all of those stockholders' who are now watching the markets turn upwards again.
The author gives three other needed reforms to help boost the market. Which ones will this Democrat-led country allow? Time will tell.
