Just When You Got Used to SOX...

Zachary Karabell writes in The Wall Street Journal about how changes to accounting rules helped set the stage for the AIG debacle, and makes a compelling case that often the rules have amplified the real-world impact of declining asset values. He also notes that accounting rules tend to be written with their authors looking back over the last crisis.

A few years from now, there will be a magazine cover with someone we've never heard of who bought all of those mortgages and derivatives for next to nothing on the correct assumption that they were indeed worth quite a bit. In the interim, there will almost certainly be a wave of regulations designed to prevent the flood that has already occurred, some of which are likely to trigger another crisis down the line. Until we can have a more rational, measured public discussion about what government and regulations can and should do vis-à-vis financial markets, we are unlikely to break the cycle.

You can agree with him or not, but you've got to wonder whether we should all prepare for another round of regulations to work with.

Bad Accounting Rules Helped Sink AIG [WSJ]