**Market Update 4-2-09**

Good Afternoon,

I’ve got good news to report today…

The Financial Accounting Standards Board (FASB) has voted favorably to relax mark-to-market accounting to help financial institutions.
Mark to market accounting has been the root of many of the problems associated with our financial institutions. This new ruling will allow banks to use alternate accounting methods for valuing their assets. This should significantly reduce the amount of write downs banks are taking on their investments and improve bank earnings. According to some rumors, it could be up to 20% improvement for the first quarter. Although the new ruling is effective for the second quarter, banks can apply it to first quarter earnings. Stocks are up on the news - the Dow is up over 300 as I write this. Mortgage rates are slightly worse as money flows out of the bond market into the stock market.
New Accounting Rules for Mortgage-Backed Securities


By THE ASSOCIATED PRESS
Published: April 2, 2009
WASHINGTON (AP) — The board that sets United States accounting standards is giving companies more leeway when valuing assets, a potential lift to battered banks’ balance sheets.
The independent Financial Accounting Standards Board voted to adopt guidelines under the so-called mark-to-market accounting rules, which require companies to value assets at prices reflecting current market conditions.
The changes could reducing the losses banks have been forced to report as the values of their mortgage-backed securities have crumbled. The decision will allow the assets to be valued at what they would go for in an “orderly” sale, as opposed to a forced or distressed sale. The new guidelines will apply to the second quarter that began this month.
The mark-to-market rules have forced banks to take steep write-downs on some assets, especially securities tied to high-risk subprime mortgages.
Please give me a call if you need any help with mortgage financing or if you want more information on mark to market & how it has impacted our financial system.