Following the controversial and destructive implosions of companies like Enron and WorldCom, policy-makers and financial industry regulators scrambled to make adjustments aimed a protecting investors from companies' tricky accounting maneuvers. In its day, the Enron bankruptcy was the second largest bankruptcy case resulting from one of the largest corporate fraud scandals. On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest such filing in United States history at the time (since overtaken by the collapse of Lehman Brothers and Washington Mutual in September 2008).

Former Federal Deposit Insurance Corporation Chair William Isaac placed much of the blame for the subprime mortgage crisis on the Securities and Exchange Commission and its fair-value accounting rules, especially the requirement for banks to mark their assets to market, particularly mortgage-backed securities. This accounting rule requires companies to adjust the value of marketable securities (such as the mortgage-backed securities (MBS) at the center of the crisis) to their market value. The intent of the standard is to help investors understand the value of these assets at a point in time, rather than just their historical purchase price.

Statements of Financial Accounting Standards No. 157, Fair Value Measurements, commonly known as "FAS 157", is an accounting standard issued in September 2006 by the Financial Accounting Standards Board (FASB) which became effective for entities with fiscal years beginning after November 15, 2007. Few pundits have made the direct correlation with the timing of this new standard and the closely coinciding October 2007 top in US equities, however the timing may be purely coincidental.

On April 9, 2009, FASB issued an official update to FAS 157 that eased the mark-to-market rules when the market is unsteady or inactive. Early adopters were allowed to apply the ruling as of March 15, 2009, and the rest as of June 15, 2009. It was anticipated that these changes could significantly boost banks' statements of earnings and allow them to defer reporting losses while paying large bonuses to their executives. Few have made the direct correlation with the timing of this new standard and the closely coinciding March 2009 bottom in US equities, however it may just be coincidental timing, again.

PICTURED: The weekly graph of the S&P 500 Index illustrates when changes were made to "mark-to-market" rules near key turning points.

Some today are increasingly concerned at the unknown extent of a handful of leading financial firms' looming liabilities following the "recovery" which has been widely publicized. Last week Citigroup Inc (C), Bank of America Corp (BAC) and JP Morgan Chase & Co (JPM) each reached lows that they have not seen since April 2009, Goldman Sachs Group (GS) hit lows not seen since March 2009, and Morgan Stanley (MS) hit lows not seen since December 2008. The market hates uncertainty, and apparently the tide is rising in a sea of uncertainty right now that is consuming the financial sector. History has proven that the action in the financial indexes is usually a reliable leading indicator for broader market averages.  A financial industry that is hard to believe in directly translates into a stock market that is hard to believe in.

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Believe in your ability to succeed, and with persistence you can. Focus on maintaining a healthful attitude, thinking supportive thoughts that create an environment in which you and your portfolio can thrive.