Fasb 157 Edtorial Fall 2008

The document discusses reforms needed to the mark-to-market accounting rule (FASB 157) to help address the financial crisis. It argues that FASB 157, which requires securities to be valued based on their last sale price, even if that does not reflect intrinsic value, has led banks to post losses on mortgage securities and curtail lending. Reforming the rule to value securities based on their "call price" (the price a bank would sell them at) would result in prices closer to intrinsic value and support markets. While the Treasury plan addresses some issues, a complete overhaul of securities regulations is still needed to prevent future crises.