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Politics : The Obama - Clinton Disaster -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (3855)	12/26/2008 8:05:56 PM
From: pompsander	Read Replies (1) \| Respond to of 103300

As a sidelight on the mark to market debacle, I am familiar with pension plans that are holding triple AAA rated securities that are performing and have never missed a payment and are almost assuredly never going to miss one. Because of the complete breakdown in rational market pricing currently in place the last bid/ask for these securities is at (for example's sake) 85 with par at 100. Now, nobody wants to buy those securities right now and the sellers don't want to sell them at that price....but at mark to market that is the "value" of the security. These pension plans will hold these securities until they mature in (let's say) ten years and receive all interest and principal payments due and owing. But, now, at close of business on December 31, 2008, those securities will be carried on the books of the pension fund at 85 cents on the dollar. This artificial markdown will flow through onto the balance sheet and give an artifical impression that the plan is less funded than it actually is. This will, in turn, under pension law, require the trustees to take action on improving funding. This required action forces employers to pay more into the fund...just when they can least afford to do so. Plan Sponsors, the Chamber of Commerce, Labor and some regulators (not to mention commentators) have been begging Cox to either suspend mark to market completely or provide some interim relief. But he is truly the deer in the headlights. Fixated on Madoff, I suppose.