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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (34030)	3/13/2009 11:00:27 AM
From: DuckTapeSunroof	Respond to of 71588

Re: [It seems like people are not exercising as much judgment as they could have.] "Yeah right. Accountants would have had a cow if the kind of action Mauldin proposed were suggested by corporate executives even a couple months ago." I think you are confusing two very different things. The quote above ('people not exercising as much judgment...') was from a board member of the Financial Accounting Standards Board... basically pointing out what most people already know: that the recently adopted "mark-to-market" rule has some vague areas that probably need further explicit explanation by FASB, so industry will have clearer, more accurate, guidance for how the new rule is supposed to operate. (New rules are often like that --- there is a certain 'breaking in' period where the rule in on a 'shake down cruise' and subject to further implementing guidance still.) But --- what Mauldin was proposing --- was a very different thing entirely. He was discussing a proposal for a COMPLETELY DIFFERENT RISK RATING SYSTEM that he advised the bond ratings agencies like Moodys and Standard and Poors should use just for ASSET-BACKED SECURITIES (mortgage-backed securities, credit car receivables backed securitizations, etc.) His argument was that the OLD SYSTEM (the exact same system they've used for decades for "one-to-one model" corporate debt ratings) has FAILED COMPLETELY at providing accurate and useful guidance when applied to the "multi-security-to-one model" of asset-backed securities... and that the old system was never any good for these new massive securitization pools anyway... but was just rolled out for the asset-backed stuff because it was an easier marketing sell for Moddys and S&P....