Re: WHAT'S DIFFERENT THIS TIME?

No need to split hairs here. The congress passed Sarbanes Oxley. Not the accounting board or the SEC. It is the responsibility of the board and the SEC put the laws of congress into practice; they "make the rules" but they do not "make the law".


Sarbanes Oxley was passed in response to the Enron fraud. Enron officers were prosecuted and convicted under prior law. Sarbanes Oxley has done us no good what so ever. For example, it did not prevent the fraudulent accounting performed at Fannie Mae or Freddie Mac. What it has done has been to dramatically increase the cost of doing business. This law in combination with others has made it impossible to comply with any one regulators interpretation of the law. Corporation officers are frequently in the position of damned if they do or damned if they don't. Even corporate salaries were largely driving up to extremes by the actions of congress.



The situation is the exact opposite of what Obama claims. He says that the deregulation of Ronald Reagan continued all the way through the Bush term and caused the current problems. There is no doubt that the capital rules or the mark to market rules need flexibility. Tight regulation is a major reason that Wachovia, a firm worth 78 billion last year, was sold for 2 billion a couple of week ago. No doubt greed was a contributing factor but the greed would not have had the path to take had government regulations not forced the actions of lenders.


As one who has suffered greatly at the expense of those willing to change and enforce rules at their whim, I am very sensitive to how incredible heavy the hand of government can be. I am a falsely convicted felon because my wife was almost at the point of death due to the heavy hand of a government run amok. My point remains that our constitution correctly limited the size and powers of our federal government and that we have allowed this government to grow too large.


I repeat the quote made from Lord Acton yesterday. "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."


Lord Acton lived after the constitution was written but his words reflect what has happened. Our members no longer go to Washington for the benefit of the people but to gain power over a national purse.

On Thu, Oct 9, 2008 at 11:04 AM, Al wrote:

FASB (Financial Accounting Standards Board) is the designated private sector organization in the US that establishes accounting and reporting standards.The Financial Accounting Foundation (FAF), organized in 1972, is the independent, private-sector organization with responsibility for the oversight, administration, and finances of the Financial Accounting Standards Board (FASB). The FAF selects the members of the standard-setting Board.

Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports. They are officially recognized as authoritative by the Securities and Exchange Commission

The Securities and Exchange Commission (SEC) has statutory authority to establish financial accounting and reporting standards for publicly held companies under the Securities Exchange Act of 1934. Throughout its history, however, the Commission's policy has been to rely on the private sector for this function to the extent that the private sector demonstrates ability to fulfill the responsibility in the public interest.
The Mission of the Financial Accounting Standards Board
The mission of the FASB is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information.
Accounting standards are essential to the efficient functioning of the economy because decisions about the allocation of resources rely heavily on credible, concise, transparent, and understandable financial information. Financial information about the operations and financial position of individual entities also is used by the public in making various other kinds of decisions.
Go to www.fasb.org for more information

The correct terminology is FASB Statement 157, as FASB can only issue statements on how to apply GAAP (Generally Accepted Accounting Principles). Statement 157's is in its title "Fair Value Measurements". It establishes that fair value is an exit price in the principal (or most advantageous) market from the prospective of the reporting entity.

(1) Congress did not have anything to do with this statement issued by FASB.

(2) The SEC determined how this statement applied to financial transactions through its authority to enact regulations, as given to them by congress in 1934.

(3) The intent of Statement 157 in full compliance with GAAP, and the devaluations that occurred in property need to be properly accounted for in company statements.

Currently blame is aimed at a congress that allowed for easier home ownership. Why was this a priority to congress? Maybe it was an easy way to avoid dealing with illegal immigration? Make those who were here more upwardly mobile, making room for illegals at the bottom?

What really caused the current crisis in liquidity will be debated for years, but until it plays out, only the people who point fingers and yell the loudest will be noticed. Who did what to create the climate that allowed this situation? Did a congress pass laws that created or contributed to it? Did the FED act inappropriately? What about the Treasury's actions? How about individual greed by bankers and Wall Street?