Jamie Dimon, the CEO of J.P. Morgan Chase, gave a talk to the US Chamber of Commerce meeting today. And, what a breath of fresh air! I have not heard the whole speech, so I cannot comment on it globally. But, he was an avid proponent of a change in the “Mark-to-Market” accounting rule, something instituted by Congress after the Enron scandal, but that has proved far, far over-reaching.
And, the mark-to-market comment was covered here by CNBC. And here is an excerpt from that article:
Dimon, speaking at a U.S. Chamber of Commerce economic conference, also supports mark-to-market accounting, but banks may have applied the fair value rule “to a ridiculous point.”
The mark-to-market accounting rule, which requires assets to be valued at market prices, is defended by investor advocates and some lawmakers as giving a clear picture of the assets held on banks’ books. But the banking industry, which has been forced to write down billions of dollars’ worth of hard-to-value assets in illiquid markets, has pleaded for a suspension or modification of the rule.
For a long time, I have advocated a change, not an abolishment, of the mark-to-market rule. In valuing financial instruments, they should be valued on cash performance, not on comperable sales. I have a short video on that concept here.
Watch that video, entitled “Refinance Now”. The SEC met in January to explore changing or doing away with ‘mark-to-market’, and did nothing. But the video explains what will happen if, indeed, there is a significant change to the flawed accounting rule. And, a wave is growing that suggests there will be that change, and quite soon.
Be ready. If you are up for a refinance, lock today. If you are not in the stock market, be ready, because when (if) the ‘mark-to-market’ rule is changed, we could well see a 1000 point bounce that day. You will want to be ‘in’ at that point.
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