fasb's m2m proposal

[wimpy77]

i know fasb is voting on a prosposal on the 2nd has anyone read it?

 

[Valerie]

Thursday April 2, 2009, 11:29 am EDT

NEW YORK (Reuters) - Stocks added to gains on Thursday after the board that sets U.S. accounting standards agreed to give banks more flexibility in applying mark-to-market accounting to their toxic assets.

Optimism was also boosted as leaders of the G20 nations agreed to put an additional trillion dollars into the ailing global economy through extra funding for groups like the IMF.

The Dow Jones industrial average (DJI:^DJI - News) climbed 275.02 points, or 3.54 percent, to 8,036.62. The Standard & Poor's 500 Index (^SPX - News) rose 30.46 points, or 3.76 percent, to 841.54. The Nasdaq Composite Index (Nasdaq:^IXIC - News) jumped 64.06 points, or 4.13 percent, to 1,615.66.

Wall Street rallies on mark-to-market easing - Yahoo! Finance

 

[Valerie]

The nation's accounting board agreed today to give more leeway to banks when assigning a dollar value to distressed assets, following an aggressive lobbying campaign by lawmakers and the financial industry to change the rules.

The move by the Financial Accounting Standards Board revises fair value, or mark-to-market, accounting, which has been blamed for exacerbating the financial crisis by forcing banks to value home loans and other assets below their worth.

But defenders of fair value accounting say it gives investors a transparent accounting of the real value of assets held by banks. Changing the rules, some say, will only give banks the chance to conceal how bad their financial conditions are.

Standards Board Gives Banks More Leeway in Valuing Assets - washingtonpost.com

The new rules give banks more judgment in deciding how to value assets when the market for those assets is not functioning. The move may boost banks' financial position because they have had to take heavy write-downs, or losses, by marking assets to market over the past year.

But some critics of the changes warn that any help to banks' balance sheets will be temporary and in reality prolong the slump.

 

[Valerie]

The nation's accounting board agreed today to give more leeway to banks when assigning a dollar value to distressed assets, following an aggressive lobbying campaign by lawmakers and the financial industry to change the rules.

The move by the Financial Accounting Standards Board revises fair value, or mark-to-market, accounting, which has been blamed for exacerbating the financial crisis by forcing banks to value home loans and other assets below their worth.

But defenders of fair value accounting say it gives investors a transparent accounting of the real value of assets held by banks. Changing the rules, some say, will only give banks the chance to conceal how bad their financial conditions are.

Standards Board Gives Banks More Leeway in Valuing Assets - washingtonpost.com

The new rules give banks more judgment in deciding how to value assets when the market for those assets is not functioning. The move may boost banks' financial position because they have had to take heavy write-downs, or losses, by marking assets to market over the past year.

But some critics of the changes warn that any help to banks' balance sheets will be temporary and in reality prolong the slump.

FASB has previously refused to change fair value rules but decided to take up the issue after a torrent of criticism from Capitol Hill, where some lawmakers have proposed taking away accounting powers from the independent board.

In addition to prominent lawmakers, Federal Reserve Chairman Ben S. Bernanke and Securities and Exchange Commission Chairman Mary L. Schapiro have expressed concerns about elements of fair value accounting in recent weeks, although they have defended it on the whole.

In general, banks have been required to value a portion of the assets on their books at whatever price buyers in the market will pay for them. That is known as the "fair value." Often, that is determined by looking at what buyers have recently paid for the same or a similar types of assets.

However, the markets for some types of mortgage-backed securities have been in a deep freeze since the onset of the financial crisis. As a result, many of the transactions involving these securities are completed at severely distressed levels. Banks have been marking their assets at those prices, recording big losses as a result.

Banks argue that the fair value doesn't represent the true value of assets when markets are highly illiquid, or there are few trades occurring. They contend that the assets are still paying a stream of cash each month and the probability that will stop is low.

The new rules will enable banks to take into account those cash flows and other factors when deciding on the value of distressed assets.

But defenders of fair value say giving banks that leeway opens a Pandora's box. It will make it very difficult for investors to know whether banks are accurately assessing the value of their assets. And, they say, banks don't want to acknowledge the fact that many of the assets they have assumed would be in fine shape are actually turning out to be heavily impaired.

Standards Board Gives Banks More Leeway in Valuing Assets - washingtonpost.com