ETFnerd

Time to Exempt Mortgage Securities from Mark-to-Market Rules

Jason, if you have an illiquid asset it makes sense to find its fair value and then to take a liquidity DISCOUNT if it is illiquid. That should write the asset down further, not write it up to a fantasy book value number.

If short sellers are successful, it is because they correctly assess that the asset is overvalued in the books.

The argument that does make sense is that valuation models are sensitive to inputs/assumptions which give a fairly wide range of valuations. Different numbers can be justified, but the market, not an accrual accounting rule, should determine the value of a company's assets.

Finally I hope you will realize that it is unfair to blame every economic problem on the Fed, the SEC, and the Treasury Secretary, etc. These are convenient scapegoats, but usually they are people working hard to ensure the best outcome for the economy, with a few exceptions. Blaming them is like blaming the police for murders while ignoring the role of the murderers. I don't recall the SEC underwriting any loans, nor underwriting them so badly that it drove all the buyers out of the market.