Messenger, Shot from the economist.com
One important rule is: if you want accurate information on the economy, go to an economist! The problem with many rules that Congress passes is that 1) they are not economists 2) they pass rulings on the economy & 3) they are influenced by what's right for themselves (from lobbyists), not what's right for the economy and the people. Yes I am making assumptions about all Congress based on a majority of Congress, I'm sure there are a few nice souls in there...somewhere.
This has been something talked about for a while now, but Congress finally succeeded at bullying and bruising an Independent standard-setter, the FASB (or Financial Accounting Standards Board) into making rule changes so that Bankers could use their infinite wisdom to place whatever value they wish on their assets and not what said assets are ACTUALLY worth on the market!
As the writer of the above mentioned article states: "IN PUBLIC, bankers have been blaming themselves for their troubles. Behind the scenes, they have been taking aim at someone else: the accounting standard-setters. Their rules, moan the banks, have forced them to report enormous losses, and it’s just not fair. These rules say they must value some assets at the price a third party would pay, not the price managers and regulators would like them to fetch. Unfortunately, banks’ lobbying now seems to be working... the independence of standard-setters, essential to the proper functioning of capital markets, is being compromised."
The changes enhance what one lobbying group politely calls “the use of judgment by management”.
So let me get this right: The banks made horrible decisions on who they would lend to, didn't verify any information provided by the recipient of the Loan, and then when their whole lending scheme collapsed on their heads and caused bank closure and recession, it's not nefarious lending practices that caused it but a rule that requires that they record foreclosed assets on their books for what the market is willing to pay for them?? Yeah, "the use of judgment by managers" is great, I can't wait until they use their infinite wisdom to re-valuate the toxic assets on their books! The banks being able to re-inflate their burst housing bubble is definitely the way to solve the economies problems.
No, no, don't take responsibility for shoddy lending practices, don't fix maladjusted banking regulations on lending practices, instead, we should change the rule that requires banks to be honest in how they report and valuate assets in their financial statements!
I think I'm done with my gripe, if you read this all, I hope this act of Congress upsets you somewhat...
