While casually listening to a money-manager panel discussion on The Kudlow Report on CNBC one evening, I was brought to full attention when I heard one money manager opine that the motivation for the Securities and Exchange Commission's intransigence in refusing to waive regulations requiring mark-to-market accounting was so as to ensure the collapse of U.S. financial institutions; this, in turn, would lead to their nationalization by the U.S. government. Having taken control of these institutions, the panelist continued, the U.S. government would then dispense with mark-to-market requirements, using the disingenuous excuse that these requirements were not longer necessary in the absence of the private investors holding any residual interest. Waiving mark-to-market requirements, he concluded, would lead to a significant upward revaluation in these institutions by financial markets; the U.S. government would then pocket this huge financial windfall and use it to further nationalize more industry. In effect, by merely...
I was invited to write this paper for presentation at the 2009 Eighth Bank for International Settlements (BIS) Annual Conference in Basel, Switzerland. In preparing various drafts, I gratefully acknowledge the comments and suggestions by Mary Barth, Brian Bushee, Paul Fischer, Pingyang Gao, Mirko Heinle, Cathy Schrand, David Tsui, and two anonymous referees. The opinions expressed, however, are exclusively my own.
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Robert E. Verrecchia; Accounting Alchemy. Accounting Horizons 1 September 2013; 27 (3): 603–617. https://doi.org/10.2308/acch-50488
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