Interesting Finance Related Stuff

I read a news article on Bloomberg of another way for the corporations to "smooth" their earnings during bad times.
Accounting Rule: Statement 159, formally known as the "Fair Value Option for Financial Assets and Financial Liabilities"
This rule issued in February 2007 by the FASB is allowing firms to "mark-to-market" the value of their debts and was lobbied in by major banks.
It is said that Merrill Lynch used this rule to record a $4 billion gain from marking-to-markets its debts which yields raised due to it massive writedowns of its assets.
I must say that the rule allows the financial statements of the firms applying it to look a lot better. The rule allows the marking-down-to-market the value of debts giving rise to unrealised gains. However, decrease in debt value is usually due to higher yield due to higher risk or poorer economic performance. In the current case the banks' massive writedown in assets, credit shortage and credit downgrades. Thus the realisation of these gains is unlikely as the banks are in need of cash.
To argue that the requirement to mark-to-market assets is unfair when debt is not allowed is not really correct. The assets written-down are more likely sold and the loss realised to fund the banks needs. This is compared to debts written down with the realisation of unrealised gains unlikely due to the lack of cash or credit in such times, the gains is more likely reversed.