Miller: Dump the Mark-to-Market Rules

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How can a component of the Dow Jones Industrial Average teeter on the edge of bankruptcy? The AIG (AIG Quote) story involves more than first meets the eye.

There is a wide disparity between what is happening and the general public's understanding. Most media accounts emphasize the federal intervention, the potential cost of a bailout, the moral hazard arguments, and the fact that taxpayers may be on the hook for losses. These are all valid public-policy issues and worthy of discussion.

Many of the accounts emphasize the rapidly rising total of capital requirements with little explanation of why these took place. (Ratings downgrades requiring more collateral for AIG.) ...