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The flawed valuation models for subprime securities have once again brought accounting issues to the forefront. In addition, mark-tomarket accounting—which requires financial instruments such as loans to be valued at the price of an ill-defined “market”—has been blamed by both Democrats and Republicans for spreading the credit contagion from bad banks to good. Mark-to-market mandates have generated questions both about their accuracy and about their economic impact. They exaggerate losses by forcing financial institutions to write down performing loans based on another institution’s fire sale even if the market for such loans is highly illiquid and the financial institution in question has no plans to sell the loans.