Subject: Re: File No.: 4-573:

October 28, 2008

Subject: File No. 4-573
From: Donald Gorton, Professor of Accounting (Emeritus)
Affiliation: Wayne State University, Detroit, Michigan

I recommend that the contemporary deleterious effects of mark-to-market accounting for financial instruments (specifically the $1.2 trillion of subprime mortgages and their securitization) be disclosed in footnotes and not run through earnings prior to actual sale or recognition of permanent impairment.

This would treat the current banking system measurement and disclosure problems, with non-performing mortgages and related instruments, in the same way that FAS - 69 (Disclosures about Oil and Gas Producing Activities), in 1982, dealt with the relevant, but unreliable, estimates of discounted net cash flows from proved oil and gas reserves.

Relevant and very useful soft data, available to management, should not be hidden from public view. Full disclosure means and requires nothing less than full disclosure. But decision relevant soft data need not be included in the audited financial statements, other than as supplementary unaudited disclosures. FAS - 157 need not be withdrawn totally, FAS - 69 provides a precedent for recognition through unaudited disclosure.

Thank you.