Former FDIC chairman: Mark-to-market causing credit crunch

In a CNBC interview, a former FDIC chairman blamed mark-to-market accounting for the credit crunch:

Financial markets are frozen throughout the world, and former FDIC Chair William Isaac puts the blame squarely on the Securities and Exchange Commission and fair-value accounting—especially the accounting method's requirement that banks "mark to market" their assets.

"The SEC has destroyed $500 billion of bank capital by its senseless marking to market of these assets for which there is no market, and that has destroyed $5 trillion of bank lending," he said.

"That’s a major issue in the credit crunch we’re in right now. The banks just don’t have the capital to start lending right now, because of these horrendous markdowns that the SEC’s approach required."