Change the accounting rules and suspend mark to market

Rewrite the numbersIf the government doesn’t want to take this route but still wants to reduce the risk of bank insolvency arising from P&L hits on troubled mortgage assets, there might be an even quicker, cheaper way. Let’s just change the accounting. If banks and financial institutions could just treat their cashflow models as the actual price of troubled assets, they might avoid the big hits to the P&L and reduction of capital and so be able to carry on lending in ways that would stabilize asset prices. On September 30, French president Nicolas Sarkozy was set to appeal to fellow EU leaders to relax the accounting rules, having met French financial leaders at the Elysée Palace. It’s an idea worth considering, if not one that Euromoney would wholeheartedly endorse....