Subject: File No. 4-573
From: Alexandra Hamilton

December 2, 2008

The mark-to-market rule should remain in place. The source of this problem lies in the reckless risk-taking in previous quarters and years that led to mark-to-market values that were unrealistically high.
Consequently, the Financial Institutions did not set aside enough reserves and this is why they are facing this problem now.
From an accounting perspective, this correction is necessary as the value is probably still to high. Doing away or suspending the mark-to-market rule would only hide issues in the balance sheets of these institutions and would further induce insecurity into the market since valuating those assets would then be up to the CEO and CFO and need not necessarily have any basis in reality. This is exactly the problem that the mark-to-market rule (and fair valuation) was designed to avoid.