Letter to the Editor
Being environmentally conscious, I am concerned about my ability to purchase a greener car. As a father, I wonder if my son will be able to finance a college education. As the sole provider to my family, I agonize about next month’s mortgage payment.
Why do I worry? Because this freeze in the credit market is negatively affecting every aspect of my life. What is to blame? Experts, including the former FDIC Chariman Wiliam Isaac, billionaire investor Wilbur Ross, former Speaker of the House Newt Gingrich, and publisher Steven Forbes agree that the controversial “mark-to-market” accounting regulation is responsible. Congress requires the SEC to provide it with a report by Jan. 2 on mark-to-market accounting to debate whether a change to the key FAS 157 rule is necessary or whether more disclosure could solve the problem.
Under these rules, banks and insurance companies are required to mark down their fixed income securities (bundles of mortgages and consumer loans) to current fire-sale prices. And even though the vast majority of the loans are not defaulting, the entire pool of loans is considered “impaired”. With virtually no market for buying and selling these “impaired” securities, banks are restricting how many new home, auto and student loans they make.
A change to the key FAS 157 rule is necessary to unfreeze the credit market and start rebuilding our economy.
How can you help? Talk to your Congressman, your Regulator, or even your neighbor to inform more people about these mark-to-market accounting regulations.
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