Thursday, March 12, 2009

Mark-to-Market Accounting Discussion Begins in Congress Today

U.S. accounting rulemakers and regulators are pushing ahead with new guidance on mark-to-market accounting that has forced banks to write down billions of dollars in assets in the financial crisis. Aimed at giving an accurate view of financial companies' books, the rules have led to huge writedowns of mortgage-related securities and other instruments at a time when markets are thin or nonexistent for some assets.

The SEC and FASB oppose suspension or elimination of the rule, saying this would hurt the quality and transparency of financial reporting and further diminish investor confidence in the markets. Federal Reserve Chairman Ben Bernanke said on Tuesday he was against suspension but called for improvements, saying the rule tended to reinforce the highs and lows of the financial system.

Testimony before a Congressional committee will be heard today and it is widely expected that the Obama administration believes it is inappropriate to suspend the mark-to-market accounting rules.