Subject: File No. 4-573
From: Charles T Steinmetz
Affiliation: Treasurer, Elliott Company

November 5, 2008

I too find that mark to maket accounting was a contributing factor to the credit crisis. I've read some articles supporting this accounting method by the market actions through the crisis. Statements by high ranking financial analysts supporting Mark to Market indicating that the value wasn't there because the "smart money" didn't move in to buy at those prices and cause a floor, and that this information was "vital" to investors.

The fact is, there was panic in the market and the markets were not reacting normally. The deleveraging among the banks caused "smart money" to not be available to form a floor, and "smart money" always goes for the best deal, and in those situations smart money waits out the panic sellers. What happened to the commercial paper market. There was no commercial paper market regardless of price, and this is fairly low risk. When the market becomes risk averse, there's no balance between risk and price. Risk is avoided at any price in certain situations, such as the recent financial market crisis.

The fact is, that by the time investors get mark to market information, it's too late to move on the information. The banks are forced to liquidate assets ahead of reporting to meet capital requirements / leverage ratios, thus forcing more securities onto the market at a time when the market is very weak. In many cases, the securities fell in price even more than provided by the financial institutions disclosures by the time investors actually had the data made available.

The alternatives provided by the FASB don't really do the job. It would be an onerous and costly exercise to do cash flow analysis on Collateralized Mortgage Obligations, given the underlying real estate pricing issues, borrower economic issues and package a strong enough analysis to offset the apparent "market price" obtained via quotations or actual sales of CMO's in the market place to the auditors. It's a lose / lose system for financial institutions.