Relax ‘mark-to-market’ accounting now, Congress demands
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Congress held accounting rulemakers’ feet to the fire today to relax ‘mark-to-market’ accounting standards, as the banking industry pressed hard for relief.
From Reuters:
U.S. lawmakers pressured the top U.S. accounting rulemaker for new guidance on mark-to-market accounting within three weeks, or face legislation to change the rule that has forced banks to record billions of dollars in asset write-downs. Financial Accounting Standards Board Chairman Robert Herz, under a barrage of questions, initially committed to the three-week timetable but then said he would have to consult with other board members. ‘I will take back a very clear message from today,’ Herz told a subcommittee of the House Financial Services panel. ‘We’ll do everything that we can.’ The Securities and Exchange Commission’s acting chief accountant, James Kroeker, told lawmakers ‘we can absolutely work with the FASB within that timeframe.’
Bankers in recent weeks have demanded immediate help on mark-to-market rules, which they say have ravaged their balance sheets.
The rules have forced banks over the last year to write down the value of mortgage-related securities to what they say are unrealistically grim levels. They want more leeway in how to value those assets, despite some investors’ concerns that the banks could mark up the securities to overly optimistic levels.
It’s clear the political backlash has become too much for those who oppose changing mark-to-market rules.
From Reuters:
Fed up with the slow pace of accounting rulemaking, lawmakers said Congress would take action if the SEC and FASB failed to act quickly. ‘If the regulators and standard setters do not act now to improve the standards, then the Congress will have no other option than to act itself,’ said Paul Kanjorski, the chairman of the subcommittee. Kanjorski, a Democrat from Pennsylvania, said there were several bills on mark-to-market pending in Congress. ‘I guarantee you that one of those pieces of legislation is going to become law before early April.’ Kanjorski set a hearing for mid-April to monitor progress by FASB and the SEC.
For the list of those who testified, pro and con, on mark-to-market rules today, and to see their comments, go here.
-- Tom Petruno