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In our earlier post on Market Down to Market we saw how Dave Ramsey sees the problem with accounting rules forcing investment firms hands and how it created this crisis. I respect his opinion greatly.

So it solidified my thinking when another great mind in real estate development and management, Sam Zell, told the same thing to a real estate conference.

And remember, Sam Zell is playing with his money when he buys real estate assets, not yours or the taxpayers, so he pays very close attention to it.

Mr. Zell assigned much of the blame to politicians and U.S. accounting rules that have forced financial firms to write down the value of their real-estate mortgage assets, which stressed balance sheets and sent the firms on a desperate search for capital.

The billionaire financier said he called Mr. Paulson nine months ago, telling him the rules needed to be suspended, so lenders would have more discretion to assign a value to the assets.

“Without fair-value accounting, this whole situation would have never reached this level,” Mr. Zell said, adding later, “You took a big problem and turned it into a gargantuan problem.”

A spokeswoman for Mr. Paulson declined to comment, but the Securities and Exchange Commission, not the Treasury Department, has authority over U.S. accounting rules.

While pointing out past mistakes, Mr. Zell didn’t fret about the future. He predicted that the economy will dip into a recession, but not until next year, and the downturn won’t be “as catastrophic” as many people fear. via Crain’s.

Related posts:

1. Market Down To Market - An Acccounting Change That Could Free Up Wall Street
2. Subprime Lenders (and Wall Street Players) Facing Increased Federal Scrutiny
3. Subprime Market on Wall Street a Free For All
4. Sam Zell - Commercial Real Estate Coming Back
5. SubPrime Mortgage Problems Made Worse By Wall Street Arbitrage