Bernanke urges ‘improvements’ to ‘mark-to-market’ rules
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Just ahead of a congressional hearing on the hot-button issue of ‘mark-to-market’ accounting, Federal Reserve Chairman Ben S. Bernanke today suggested there should be some leeway in interpreting the rules.
The idea of weakening mark-to-market, which could make bank balance sheets look better, was one catalyst behind Wall Street’s big rally today.
From Reuters:
‘Given what is going on in the world, we should look to identify the weak points of mark-to-market and try and make some improvements on a more expeditious basis,’ Bernanke said in response to an audience question after a speech to the Council on Foreign Relations. ‘We need to do a lot more to provide guidance to the financial institutions and to the investors about what are reasonable ways to address valuation of assets’ in illiquid markets, he said.
As I noted here and here, there is a major new push from the banking industry to suspend or alter mark-to-market accounting, which critics say has forced banks to mark down the value of mortgage securities to ridiculously low levels.
A House Financial Services subcommittee will hold a hearing on the issue Thursday. The witness list for the hearing was released today, and it includes Robert Herz, chairman of the Financial Accounting Standards Board, which sets U.S. accounting rules; James Kroeker, acting chief accountant at the Securities and Exchange Commission; and, representing bankers, Thomas Bailey, chairman of the Pennsylvania Assn. of Community Bankers.
For the full list of witnesses, go here.
-- Tom Petruno