FASB fair value rules ‘undermine stability’
Thursday 18 November 2010 - by Will Henley
Major revisions to financial instrument accounting rules proposed by the US Financial Accounting Standards Board have come under fire from the Federal Deposit Insurance Corporation.
Under the changes advocated by FASB, loans, deposits and most other financial instruments would be marked at fair value as a de facto standard for measuring assets and liabilities.
In September, FDIC, along with the four other main federal bank regulatory agencies, submitted a joint letter to FASB outlining their opposition to fair-value measurement.
In the letter, Bair and her counterparts called for the continued application of amortised cost accounting, where banks use financial instruments for the collection or payment of regular cash flows.
Speaking on Wednesday to the joint AICPA and SIFMA conference on the securities industry, Bair said that she instead supports improved supplemental disclosure of fair-value information in order to give investors a "more informed view".
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