The onslaught against mark-to-market accounting continues. This week being a rather crucial one. Readers may recall that the FASB — the regulatory body which determines accounting rules and policy in the US – announced a series of changes to its mark-to-market rulebook a fortnight ago.
We now draw readers’ attention to the below, from Bloomberg today (emphasis ours):
March 30 (Bloomberg) — Four days after U.S. lawmakers berated Financial Accounting Standards Board Chairman Robert Herz and threatened to take rulemaking out of his hands, FASB proposed an overhaul of fair-value accounting that may improve profits at banks such as Citigroup Inc. by more than 20 percent.
The final vote on the proposed FASB changes comes on Thursday this week. And as Bloomberg makes clear, amid considerable political pressure, it looks likely to clear.
Could mark-to-market be the new short-selling, we wonder? The latest intellectual bogeyman for restless lawmakers to target?
Alas, unlike with a short-selling ban, which was relatively harmless, tinkering with accounting rules might have more profound and difficult to quantify effects. Not least since we imagine that moving the goalposts in such a brazen way will do nothing to alleviate the chronic shortage of trust in the financial system. Going down a more Japanese route – with losses clogging banks’ balance sheets for years to come because of a lack of transparency and an unwillingness to face up to reality – would not be welcome.
Related links:
A fair value antidote is rushed by FASB – CFO.com
A mark-to-market history lesson - FT Alphaville
First step towards mark-to-market suspension? – FT Alphaville