Even with Fannie and Freddie inflating the bubble and the Fed and the rest of the Bush Administration weakening the dollar, the crisis never would have become so unprecedentedly destructive but for a seemingly arcane accounting principle called mark-to-market, or fair value, accounting.
This matters more and more because Japan is due to introduce market-value-based accounting this year meaning that unrealised securities losses will start being deducted from their capital.
The SEC had just adopted an obscure accounting regulation known as mark to market in 2006 (also known as fair value accounting).
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The most immediate is the mark-to-market, or so-called fair-value accounting, rules that regulators have been enforcing since the early 1990s.
Just as important, the Administration must deal decisively with the insanity of mark-to-market, or so-called fair value, accounting that has forced institutions under severe pressure from regulators and accountants to maniacally mark down to absurdly low levels the value of unmarketable securities and assets, thus destroying entities that have positive cash flows.
More controversially, the government plans to suspend mark-to-market accounting rules, which force banks to value their holdings at market prices.
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With the market value plummeting, he argued, mark-to-market accounting turned AIG's balance sheet into a nightmare.
In all, the exemption would cover firms accounting for only 6% of total American stock market value, leaving 94% of public companies by value still subject to Section 404.
We're in a market-based economy, where we're looking at fair-value accounting and marking instruments, to the markets.
Of course, the morass of accounting scandals and disappointments that have enveloped Elan explain its low market value.
Mr Isaac reckons that many of the measures that were introduced to instil discipline notably fair-value accounting, which forces banks to mark assets to the prevailing market price actually exacerbated the latest crisis.
New accounting rules demand that they start valuing their equity portfolios at market value at the end of this month, which could constrain their ability to pay dividends out of retained earnings.
And, in the new financial year, changed accounting rules will oblige banks to carry shares on their books at market value.
For instance, the recent guideline on fair-value accounting, which decrees that companies must show equity holdings at their market value, also contains a provision that allows them to avoid writing down shares if they think that they will soon recover in value.
The introduction of stricter accounting standards this year means that banks will have to value equities at market, rather than historic, prices when they close their books next March.
Even small domestic investors have been getting in on the market moves, with trading value from individual buyers reaching a six-year high in February and accounting for 30% of average daily volume, up from less than 20% last October, according to broker Reorient Group, which cited data from the Tokyo Stock Exchange.
The string of accounting scandals that shattered Enron, WorldCom, Global Crossing and others evaporated billions of dollars in market value.
The string of accounting scandals that shattered Enron, WorldCom, Global Crossing and others caused billions of dollars in market value to evaporate.
The Plaza Group claims in bankruptcy filings that it was undone by recent accounting rules that force private equity partnerships to write down the value of their investments in accordance with market valuations, as opposed to holding them at cost.
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