Treasury: Keep Mark-to-Market

Treasury Department officials don't want to see a suspension of mark-to market rules at this point in the financial crisis even though they admit the current accounting rules are "pro-cyclical" in a way that depresses valuations of mortgages and other assets. "I am not sure changing the accounting rules mid-stream is going to increase investor confidence in how much these assets are worth," Treasury assistant secretary Neel Kashkari said. "It is also hard to make these kinds of changes in the middle of a crisis," he told a Mortgage Bankers Association conference. The Securities and Exchange Commission is conducting a study on mark-to-market accounting and it is slated to submit its recommendations for changes or improvements to Congress by Jan. 2, 2009. "We all see the limitations of mark-to-market. It is clearly pro-cyclical," Mr. Kashkari said. But the man in charge of Treasury's Troubled Asset Relief Program said, "No one has come up with a better system yet to mark-to-market - at least that we've heard of."