But the ignorant (i.e., the vast majority of people) believe the opposite. They think more government control = stricter and smarter regulations.

Here’s another interesting quote from the above link:
“The legislation does not change GAAP, the congressmen noted, but it would create an environment in which FASB will have the ‘tools and flexibility it needs to adjust GAAP for future economic conditions. The legislation provides for discretion in the regulatory community to consider the overall condition of the financial markets in applying GAAP, so the principles are not applied in a way that exaggerates or multiplies cycles in the markets.’”

Hey companies, send your campaign contributions and lobby dollars our way. We’ll adjust GAAP for you when it suits your fancy. We’ll say we’re trying to stop principles that are contributing to negative cycles in the markets.

So, the financial firms liked mark to market on the way up, when they were marking up their assets, using them as leverage to acquire more debt backed assets, then marking them up again, wash, rinse, repeat. Oh, but now, they want to get rid of the mark to market rules because it’s forcing them to write down their assets. So we like the mark to market rule when it benefits us, but let’s repeal it when it doesn’t. Funny, I don’t remember a huge outcry from the financial firms when mark to market was implemented.

One of the other principles in accounting is “consistency.” If some bureaucratic fools can change the rules on a whim that gives them or their cronies tangible benefits, consistency is gone. Consistency, thou art a jewel…well you were. But I’ve found a new love, crony capitalism.

Most people see it as a way to address past problems, I see it as a new opportunity for corruption and arbitrage. The fact that the members of the ABA (As stated in the article linked by Ms de Coster) are happy about the bill shows who are the ones that will profit from the passage of such bills. Have people forgotten about Sarbanes-Oxley?

prettyskin,

In the past, the FASB (Financial Accounting Standards Board) had been a fairly independent group (from gov’t ‘oversight’) making accounting pronouncements for everyone to follow, US GAAP. All U.S. companies had to follow the same rules (if you wanted an auditor to sign off on a GAAP audit report), whether you reported to the SEC or not. There are many non-SEC reporting companies that issue audited financial statements. For example a bank may require a company to have an audit to secure a loan.

Then comes along Sarbanes-Oxley and the PCAOB (gov’t created entity with gov’t appointed officials on it). PCAOB regulates the auditors of SEC reporting companies, not specifically the accounting used.

This next iteration, now would give leeway to government beaurocrats to actually change the accounting rules, possibly even over the objection of the FASB. FASB has said, stick with mark to market rules. And at this point I agree with that sentiment, since companies used mark to market to “legally” overstate their assets in the boom phase. You’ve got to stick with the rule to revalue them back to where they should be during the bust phase. It’s consistent.

This legislation if passed, has the potential to vest within the executive branch of our gov’t, the ability to re-write the accounting rules midstream. It is one more way in which politicians and beaurocrats can change financial reporting standards to hide the terrible effects of gov’t intrusion.

For example, in this current economic bust cycle, imagine that at the top, when the bubble begins to burst, the mark to market rules, which had allowed financial companies to inflate their assets, now were “suspended” for a time. Even though the market for these assets is dropping, the companies then keep their assets over-valued, thereby hiding the fact that they are insolvent. This will ultimately fraudulently fool more people into putting more money into, what would amount to at that point, a giant ponzi scheme, allowing the politically connected to get their money out while the non-politically connected investors shovel more money into a hole, before they realize they’ve just lost it all. Meanwhile, before the collapse, the then current administration will claim everything is fine. Once a new administration comes into power, and the place falls apart, the media and public will blindly blame the new guy. Whoever that would be, republican or democrat. We’ll have hearings, a big political fight, blame the ‘free market’ (as if one actually existed) and then propose more gov’t intrustion to fix the problem. That intrusion and regulation will ultimately benefit the few well connected at the expense of everyone else.

I’m sure there are a great many other scenarios that corrupt politicians and beaurocrats would be able to invent in the future to enrich their crony friends.

And Briggs, IFRS won’t matter if the SEC, through this new legislation, would be able to “grant” US SEC reporting companies the benefit of changing their reporting standards even if it’s only temporary.

AC, with your clarity I’ll say the federal government is trying its best to be relevant. That is, “change you can believe in”, change the rules when it doesn’t benefit politicians and their crony friends.

So, “change” is a concept just like true democracy and the lost “free market”.

Is there a place for an honest business person, who is willing to face failure when bad decisions are made?

Wealth who chooses not to fail at the expense of the working class is undoubtedly connected to politics and politicians are the errand boys and girls of majestic greed with a “big bang” of corruption.

Amtrack? Even OTB loses money! For those who don’t know, Off Track Betting is a NY state government run center to bet on horse racing.

Let’s have the only people on Earth who lose money with a bookie joint run everyone’s business for them. What could possibly go wrong?