Jim Cramer was on fire yesterday. No doubt he’d like what hit the Washington Post a little while ago. From Frank Ahrens we learn the SEC has just made a rather important announcement that could mean something to the markets.

The Securities and Exchange Commission and the Financial Accounting Standards
Board have just made an announcement that, dry as it sounds, may mean a great
deal: “When an active market for a security does not exist, the use of
management estimates that incorporate current market participant expectations
of future cash flows, and include appropriate risk premiums, is acceptable.”

…Simply put, mark-to-market accounting requires companies to set the value
for the assets they own at the price they could fetch on the open market right
now. The prices must be “marked to market;” hence the phrase.

What does that have to do with the current crisis? The root problem now is
that financial institutions have been caught holding value-less, or “toxic,”
assets on their books, such as the mortgage-backed securities based on sub-prime
mortgages that have defaulted.

If all this sounds like voodoo accounting, well, all accounting can sound
that way sometimes. But remember this: Even though homeowners have defaulted
on sub-prime mortgages, there is a house at the bottom of it all and that
has real value.

Shorter: The SEC’s statement makes these “toxic” assets easier to put a price on and eventually sell, because, as Aherns explains, people can take other things into consideration when placing a price on them. They cannot put any value they want on the “toxic” assets. It means that just because they’re “toxic” doesn’t mean there isn’t something good at the bottom. You know, like that house that’s at the end. Even better explanation here (via memeorandum): This is just one aspect of the credit crisis, but MTM has acted as something of an accelerant for the financial troubles of institutions holding mortgage-backed securities for which there is no active market.

See your local egg head economist for more answers, because I still contend Congress is clueless. Though you might find some of the comments at Aherns piece helpful.

As for McCain, well, that he can read off of cue cards isn’t all that impressive. Obama’s a bit better because he doesn’t need color by number notes, but he’s still missing the empathy quotient, though in the debate he got closer to the kitchen table side of the issue. He needs to work on that more and more, not allowing McCain to take him into the weeds of earmarks, which your average American isn’t worrying about right now. But I haven’t seen either of the candidates really take this issue and own it, while also show they get what Americans are going through in trying to understand it themselves. It’s not what either of these guys do best. “Feeling your pain” is a Clinton thing.