Changes to Market-to-Market accounting rule

I am certainly no accounting expert but the news that the "M-to-M" rule might be changed so as to help the banks out is definitely not a good idea! The simple reason is that without such rule, valuation in the accounts may become a worse problem. How do you rely on the accounts after the rule change? If the banks are no longer required to write-down by following the M-to-M rule, then the valuation shown in the accounts may become absolutely unreliable! You don't even ascertain which figure is reliable and which is not.

What follows will mean that the accounts released by the banks will either become useless or at best very doubtful. Even though relaxing the rule may help to boost the accounts, the essential question is what would be the true of the asset concerned? If you don't use Market-toMarket rule, you must have a reliable substitute to answer such question.

However, one may argue that even with the current use of M-to-M rule, the accounts are not reviewed without skepticism! You may have doubts such as the bank has made sufficient writedowns, etc.

Anyway, unless you have found a better alternative, it is clearly unwise to change the rule.