by JS O’Brien
Republican Representative Candice Miller of Michigan has a truly marvelous idea for getting the economy back on track: lie through your teeth. I suppose this shouldn’t be surprising, since it seems to be the first option for Republican politicians everywhere.
So, let me explain what she wants to do. Currently, accounting rules require banks to value assets (like mortgage-backed loans) at their current market value. Miller wants to allow banks to … well … value them differently … somehow. I mean, it’s not what you can actually sell those assets for, it’s what you can … ahm … pretend you can sell them for! If you can pretend those assets are worth more than they are, you can make the bank look as though it’s more solvent than it is. Then, if the other lenders are butt stupid, they’ll lend money to you based on what you say about your bank’s solvency instead of what the situation really is.
What a great idea! Let’s convince lenders to lend money based on underlying value that isn’t there.
Oh, hey, haven’t we done that already????