As a follow up to my December 2nd ‘rate update’ the Wall Street Journal is reporting that the SEC will likely NOT remove mark-to-market accounting rules which many have blamed as exacerbating the financial meltdown on Wall Street.
In case you’re not familiar with these standards the article explains:
Mark-to-market accounting requires companies to value financial assets at their fair value — the price they can fetch in the market. That has led companies to take big write-downs on thinly traded securities, even if the underlying assets aren’t severely troubled. The write-downs have put pressure on prices of financial firms’ stocks and forced many of them to sell assets or raise money to stay well above the capital requirements that have been set by regulators.
I had referenced the removal of these standards as being a potential catalyst for a stock market rally which would have put upward pressure on mortgage rates. However, it appears for now this will not take place.