Home » Our Columns

SEC, FASB Likely to Resist Calls to Suspend Fair-Value Rules

Jesse Westbrook 30 September 2008 One Comment

But House May Pressure Regulators

The U.S. Securities and Exchange Commission probably will resist calls to suspend the fair-value accounting rules that some members of Congress blame for exacerbating the global financial crisis, people familiar with the matter said.

The SEC and Financial Accounting Standards Board instead said banks should apply rules that require them to review their assets each quarter and report losses if values have declined, according to a proposal released today. A suspension isn’t being considered, said the people, who declined to be identified because the plan hasn’t been completed.

Congressmen, banking lobbyists and companies including American International Group Inc. have urged the SEC to place a moratorium on fair-value accounting, saying it forces firms to report losses that they never expect to incur. Federal Reserve Chairman Ben S. Bernanke and other proponents say a suspension would erode confidence that firms are owning up to losses.

One Comment »

  • John Powers (author) said:

    “In the past couple of weeks, fair-value accounting has been under attack,” JPMorgan Chase & Co. analyst Dane Mott wrote in a report today. “Blaming fair-value accounting for the credit crisis is a lot like going to a doctor for a diagnosis and then blaming him for telling you that you are sick.”

    More like Doctor telling you he must cut off your foot because he just amputated the last patient.


Leave your response!

Add your comment below, or trackback from your own site. You can also subscribe to these comments via RSS.

Be nice. Keep it clean. Stay on topic. No spam.

You can use these tags:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

This is a Gravatar-enabled weblog. To get your own globally-recognized-avatar, please register at Gravatar.