Editor's Note: FASB's Financial Crisis Advisory Group meets Thursday to review reporting issues that impact major financial services companies such as Citigroup, AIG, Bank of America, Wells Fargo, Goldman Sachs, JPMorgan Chase and many others. We welcome alternative opinions about how the FASB should respond. To submit an opinion piece, please click here to send an email to the editor.By Paul D. Mendelsohn, president and chief investment strategist at Windham Financial Services We are at a critical point in time in our economic history, where if we do not understand the trigger points that brought us to this level of crisis, there will be little hope of solving our current dilemma. It is easy to look back at the 1930's and see that the Smoot-Hawley Tariff Act and Federal Reserve monetary policy played a major roll in creating and prolonging the worldwide depression. So, why is it so difficult for policy makers to understand the roots of our current crisis and address today's problem? One of the major trigger points of the current disaster is FASB 157, better known as the "Fair Value Rule" or "Mark To Market Rule" that took effect for corporate financial statements produced after November 15, 2007. This rule shifts the burden of accounting for assets under GAAP to market participant based assumptions, as opposed to an intrinsic model or theoretical based assumptions. Here's the problem. Let's say a bank has purchased a series of geographically diversified securitized mortgage backed securities. How do we value them? Let's say that within that mortgage series, 20% of those mortgages have defaulted and the prices of those defaulted houses have declined and can be sold at roughly 50% below what they were valued at when the securities were originally issued. What is the intrinsic (theoretical) value of the security? The answer is approximately 90 cents on the dollar. 100 - (0.20 x 0.50).