Ben's Shift on Mark-to-Market Is the Right Move

Did Ben Bernanke just say that we have to work on creating a more robust and more pertinent rule on mark-to-market accounting right now, when mark-to-market isn't producing accurate balance sheet readings? Did he say that?

I think he did. I think in this critical Council on Foreign Relations speech, he green-lighted the notion that we need to modify the strict mark-to-market rules for banks because they aren't producing the right results, and they are influencing the ratings agencies in a way that is not productive. This is a change of his statements; he wants it adjusted for now.

It is unnerving to hear that some commentators believe that if mark-to-market is made "mark-to-market lite," the banks can raise more capital. They can't raise a dime! What an absurdity.

Also, when Bernanke started by saying "no suspension" of mark to market -- nobody wants it suspended, we want fair-value analysis of mark to market to be re-examined ... and the rules allow it, for heaven's sake!

Lots of the problems on this issue come from a timidity -- somewhat justified -- of the administration to take on the FASB and the ratings agencies. They don't want to usurp the "system." But the limitations of mark-to-market -- FASB 157 -- even under recent guidance are crystal clear in this environment: It requires a concerted effort to address "fair value" rules and ratings agency criteria. I think the administration is intimidated by the prospect of taking the lead from the FASB.

I think they are wrong. In fact, I think it is incomprehensible given where we are to date. They need to step up and take the lead. And they need to do it now.

Their worries about being politically exposed, about being hands-off, or being too free-market-intervening are all off the table. At this pace, we won't have to worry about banking rules -- there won't be any banks left to regulate!

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Know what you own: Companies in the financial industry that would be affected by any change in the mark-to-market rules include Citigroup (C - commentary - Cramer's Take), Wells Fargo (WFC - commentary - Cramer's Take), Bank of America (BAC - commentary - Cramer's Take), Goldman Sachs (GS - commentary - Cramer's Take), Morgan Stanley (MS - commentary - Cramer's Take), JPMorgan (JPM - commentary - Cramer's Take) and U.S. Bancorp (USB - commentary - Cramer's Take).

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