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So Stephen Schwarzman, the billionaire boss of private equity group Blackstone, thinks fair value accounting is partly to blame for the credit crunch.

The view is worth considering, although it isn’t uncontroversial. In short, banks are forced to write down the value of their assets as the market values of those assets fall, so recording big paper losses - even though some of those assets might be “money good” if held to maturity (itself a debatable point).

But what is missing from the debate is Mr Schwarzman’s earlier support for fair value accounting.

When Blackstone was preparing its IPO last spring, it planned voluntarily to adopt fair value rules before they came into force, and to account for its fees using FAS 159, a rule closely linked to the FAS 157 rule at the heart of the bank accounting controversy.

Under Blackstone’s plan it would have booked a profit every time it did a deal, a proposal abandoned after opposition from advisers to the float.

But the details of the idea, which made it through several versions of the published prospectus before being dropped, reveal just how gung-ho Blackstone was to use fair value accounting: it would have boosted its profits for 2006 by a fifth, or $595m.

The idea is pretty complex for non-Alphaville regulars. Blackstone’s carried interest, its 20 per cent share of profits from the future sale of a company, was to be treated as an option. In effect, the firm had an option over the increase in value of companies it bought. It could use Black-Scholes options methods to put a value the option - $595m, in this case, for all the companies in its portfolio.

No other listed private equity group does this, not least because carried interest is not actually traded, even though theoretically it could be. But the approach was intellectually appealing to accountants, and not just those at Blackstone who saw an easy way to boost the numbers.

Schwarzman et al were unable to explain the idea to investors sufficiently well to put it into action. But his explanation for why he has switched from a radical supporter of an accounting revolution into a die-hard reactionary would be interesting to hear.