Banking Advisors Offer Mark-to-Market Forum

Chicago-based ""Performance Trust Investment Advisors, LLC"":http://www.performancetrust.com, a banking and investment advisory firm, has created a virtual forum at a new Web site (""marktomarketdebate.com"":http://www.marktomarketdebate.com) to help the financial sector and the public better understand how ""fair value"" standards, also known as mark-to-market, and related accounting and bank regulatory rules impact bank lending.
According to Rich Berg, CEO of Performance Trust Investment Advisors, the mark-to-market rules are having a disastrous effect on today's distressed market because they are discouraging banks from taking on significant amounts of new lending - something that is vital to the nation's economic recovery. ""We encourage all Americans to get educated, get involved, and contact their Congressman or Congresswoman to make sure the regulatory bodies quickly take action to address these problems and get the economy moving again,"" Berg said.
Under mark-to-market accounting rules, banks and insurance companies are required to report fixed-income securities, made up of bundles of mortgages and consumer loans, at today's fire sale prices - even when these investments are currently performing by delivering cash flows to the investor.
Related to this issue is the bank accounting rule called ""Other Than Temporarily Impaired"" (OTTI). This rule requires that an entire pool of loans be considered ""impaired"" when only a small portion of the loans in the pool may not be performing as expected. In addition, Berg said, there are bank regulations that are compounding these accounting-related problems.
Berg explained, ""These rules require banks to take write-downs on their investments, destroying capital and the ability to lend. Yet most of these fixed-income securities being written down are not toxic subprime mortgages. Many are regular, performing loans made to Americans to purchase homes and autos and to finance college educations.""
To hear the many voices on the mark-to-market issue, ""click here"":http://www.marktomarketdebate.com.