I don't know how much tolerance my friends here have for financial reporting arcana so this will be a very brief post on mark to market accounting. Mark to Market is an accounting term that requires banks, financial companies and public companies that invest their cash to give frequent, market based disclosures of the value of the securities on their books.  It's necessary because sometimes one public company owns shares in another and investors should probably know that, "hey, those Microsoft shares on Google's balance sheet are worth half of what they were six months ago!"  (I made up that scenario).  It works very well for stocks and bonds because those are liquid markets.

But it can also be applied to other types of securities like the mortgage backed securities and other asset backed securities on bank balance sheets.  The banks were very happy, when a heated market for these securities meant that they could mark the values up. Now that the market has dried up, they have to mark the items down.  They don't want to.

Now, they do have a reasonable argument -- the market is now so dried up and prices so depressed, they say, they'd rather hold the securities until better prices emerge or until maturity then sell.  So, they argue that they should be able to, with their auditors, come up with other valuations for these assets.  Higher valuations, natch.

Problem is, the banks are leveraged. Leveraged entities don't always get to decide when they have to sell assets.  So, mark to market is important, even if it's inconvenient for bank managers.  Shareholders do need to know what the fire-sale value of a company's assets are.  They deserve to know.

But here's the other twist -- these assets are considered bank capital.  So  when the value drops, regulators might require the banks to recapitalize to meet debt loads.  The banks can only do that by selling stock (tough in this market) or business units (even tougher in some cases).  So one proposed solution is to give shareholders mark to market information but to have the regulators take models, intentions and auditor's opinions into account.

I think I like that idea but am not sure.  One thing I am sure of is that the bank lobby will push congress to just abolish mark to market and that congress or regulators will assume the public doesn't care about accounting terms and will just let it happen.  Even Jonathan Taplin, who posts here, has called for a mark to market suspension.

Bad idea.  just remember, when mark to market worked in their favor, when it allowed the banks to raise more and more debt as they wrote up their balance sheets, nobody complained.

Mark to market has a purpose.  It keeps them honest. We can compromise on it at the margins but in the end, we need it.

I think it's important not to completely jump down Obama's throat during the first two months of his presidency, especially for the actions of the various departments in his administration, most of which aren't fully staffed yet.  But I'm dismayed that Obama has yet seen fit to reduce the government's domestic spying programs and that his Justice Department is defending Bush era domestic spying tactics.

Currently, the Obama administration is trying to prevent a court from hearing a lawsuit brought against the government by a Muslim charity with evidence that the charty's conversations with their lawyers were intercepted by the government.  The charity wants damages and, more than that, a court to rule on the legality of the government's eavesdropping. It's no surprise that the Bush administration fought the suit on state secrets grounds but it is surprising that the Obama administration is following the same legal strategy.

I think it's important for the court to hear this case and for details of the government's surveilance programs to be made public.  I'd like to hear Obama justify his administration's actions on this one.

I got hopping mad last summer when Obama voted for a domestic wiretapping bill that had two travesties in it: it codified a domestic spying program that many of us thought had been illegal before and it included amnesty for the telecommunications companies who betrayed their customers and should have been forced to pay civil penalties to their victims. I was at least able to hope that though a bad law was passed that an Obama administration would act responsibly with these new, expanded powers.

Obama's state secrets claim in this charity case is not a good sign.  Republicans (like those behind the Op Ed page of the Wall Street Journal) see it as an endorsement of Bush era security policies and they're right.  While I trust Obama far more than I ever trusted Bush, it's not the president that matters here -- it's the government employees of the national security and intelligence agencies that can't be trusted.  Courts are the only venue that citizens who have been illegally spied on can turn to for help and the Obama administration, just like the Bush administration, wants to deny them access to judges and juries.

Obama inherited  a lot of Bush's blunders and I think we all accept that in trying to undo them, he's going to do some things that we on the left are not going to like.  I think leaving 50,000 troops in Iraq and calling it a withdrawal means that we're leaving 50,000 too many soldiers in Iraq.  But I'll accept that Obama has to do what he has to do to end the war responsibly.

In this case, though, he's not trying to end a Bush era policy, he's continuing it and he's defending the indefensible.  We don't need more domestic psying, we need less of it.  Obama should be rolling back the government's powers, not embracing them.