Testimony Of William M. Isaac Chairman, The Secura Group of LECG Former Chairman, Federal Deposit Insurance Corporation

Thank you Chairman Kanjorski, Ranking Member Garrett, and Members of the
Committee for conducting this very important hearing on mark-to-market (MTM)
accounting.

I use the term “mark to market accounting,” rather than “fair value accounting.”
Everyone’s goal is a fair and descriptive accounting system. There is nothing “fair”
about the misleading and destructive accounting regime promoted by the Securities and
Exchange Commission and the Financial Accounting Standards Board under the rubric
“fair value accounting.”

MTM accounting has destroyed well over $500 billion of capital in our financial
system. Because banks are able to lend up to ten times their capital, MTM accounting
has also destroyed over $5 trillion of lending capacity, contributing significantly to a
severe credit contraction and an economic downturn that has cost millions of jobs and
wiped out vast amounts of retirement savings on which millions of people were counting.

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