A lot of attention has been paid to mark-to-market accounting of late, with recent congressional hearings and proposals by the Financial Accounting Standards Board to modify impairment accounting and valuations.

But few know that there is even an argument that the decision to end this method of accounting for capital helped end the Great Depression. Disclosure of market marks, by contrast, is not a problem and, in fact, should be extended and enhanced. Using mark-to-market accounting in profit and capital calculations is the culprit: It contributes to a vicious spiral.

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