Subject: File No. 4-573
From: Dennis K. Cohen

February 7, 2009

In regard to the valuation of assets on bank and insurance company books, that can't be fairly valued because there is no functioning market, why not use present value accounting to value the assets. For example, the present value of a stock is the present value of the stock's future cash flows (dividend payments), and the value of a interest bearing asset would be the present value of future interest payments.

It seems more reasonable to value "tainted assets" that have no market at the present value of future cash flows rather then "marking the assets to market" when there is no functioning market. If the method is used, mark-to-market accounting would not unfairly affect the bank/insurance company equity, and could be used effectively when a functioning market does exist.

For the "tainted assets" on the banks/insurance company books that are still paying interest, it would be necessary to determine the cash-flows that will pay-out in the future and discount the cash-flows at an interest rate which is representative of the risk that the cash flows will materialize. This is a much more sound approach which can be audited and would not be subject to as much manipulation as the current method of mark-to-market.

I suspect the financial institutions are using some type of present value analysis to value securities, however, they are probably using a method that can't be audited and is therefore, inherently biased.

Fair value accounting is used under GAAP in a number of situations, therefore, there is a a body of knowledge that can be used without a significant amount of study.

Please send a response to my idea, as I believe this would work.