The Wall Street Journal is reporting this morning that the new, compromise "don't call it a bailout" bill is moving its way through the Senate. It focuses on the proposal that FDIC deposit insurance be raised from $100,000 to $250,000 in an attempt to keep the modestly wealthy from causing a run on already undercapitalized banks. There is a little bit of complexity, there - will they ever be able to get the rates back down, when the crisis is over? Will they be able to get the extra insurance premiums out of already cash-strapped banks? But, overall, that proposal makes sense to me.
However, more interesting, and that I had not heard reported elsewhere, is that the SEC on Tuesday issued guidance on the applicability of "mark to market" accounting for assets that have no useful market at the moment. I haven't blogged about this, specifically, but it's my personal belief that the requirement of "mark to market" on illiquid and untraded items (such as Mortgage-Backed Securities) have been a major player in bank illiquidity and subsequent insolvency. From the Journal:
The SEC said on Tuesday that in some circumstances it might make more sense to judge assets not on what the market will bear, but on their intrinsic value -- for example, if they're from a highly respected company that is unlikely to default.
Like, say, Bear Stearns? Still, any relief from the current cycle of revaluing undertraded items, leading to more revaluing is welcome. Further, the article states that one of the items being debated for the new, revised bill, is a suspension of the "mark to market" rule, altogether. No more details are given - I can't imagine they'd suspend it entirely - but it's nice to see Congress and the SEC at finally starting to think about something that has been clearly a big contributor to the ongoing crisis.