So, according to CNBC, the rally today is due to two things. First, the typical dead cat bounce. Second, the SEC is thinking about changing accounting rules so they can inflate the value of certain assets:
The SEC and Financial Accounting Standards Board instead said banks should apply rules that require them to review their assets each quarter and report losses if values have declined, according to a proposal released today. A suspension isn’t being considered, said the people, who declined to be identified because the plan hasn’t been completed.
Congressmen, banking lobbyists and companies including American International Group Inc. have urged the SEC to place a moratorium on fair-value accounting, saying it forces firms to report losses that they never expect to incur. Federal Reserve Chairman Ben S. Bernanke and other proponents say a suspension would erode confidence that firms are owning up to losses.
“In the past couple of weeks, fair-value accounting has been under attack,” JPMorgan Chase & Co. analyst Dane Mott wrote in a report today. “Blaming fair-value accounting for the credit crisis is a lot like going to a doctor for a diagnosis and then blaming him for telling you that you are sick.”
Loosening accounting rules will be a winning strategy, I am sure.