paso11

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

Lets just step back a few months, banks typically had over levered, bloated balance sheets with $bns of MBS. Not writing these down would just give shareholders, lenders, and other users of financial statements a false sense of security and would allow bankers to continue as they were. As an investor I would want a balance sheet to represent the accurate financial position and economic reality of a company.

Without writing down these 'assets' we would not have been alerted to the failings of management, inadequate risk controls, poor underwriting standards, etc.

I agree with Kinabalu, if the securities had been priced and rated correctly to start with the write downs would have been much smaller. If banks learn lessons from this then we might not have similar writedowns in future although I would not hold your breath, "these things tend to happen very 10 years or so, gets rid of all the bad blood".