Mark to Market Possible Changes - Stock Market Forum, Penny Stocks, FOREX, NASDAQ, AMEX, NYSE, Live Chat

**Volatile22** · #1 03-19-2009, 01:02 PM

Not sure if this has already been discussed here, but BadThad brought this to my attention so I figured I would look into it. I was able to dig up a video on the issue. Here it is:

Stocks Today: Changing from Mark to Market - WSJ.com

**Quikshft** · #2 03-26-2009, 09:34 PM

Looks like FASB will vote on this April 2nd.

FASB Impairment Changes Could Boost Banks' Profits - CFO.com

**Volatile22** · #3 04-01-2009, 04:45 PM

Another article:

Mark-to-Market Lobby Buoys Bank Profits 20% as FASB May Say Yes - Bloomberg.com

thegreatgate · #4 04-02-2009, 08:39 AM

FASB poised to give firms leeway in valuing assets
Accounting board poised to give companies more leeway in asset values; could undercut bailout

Quote:

WASHINGTON (AP) -- The board that sets U.S. accounting standards is expected to ease rules that force banks to value assets at current prices, allowing them to reduce their losses on paper.

In a twist, though, the expanded leeway for financial institutions could undercut the government's new financial rescue program in which it is joining with private investors to buy up about $500 billion in toxic assets from banks, some experts say.

The independent Financial Accounting Standards Board, under pressure from Congress, last month proposed the relaxed version of the so-called mark-to-market rule. That's a requirement that companies value assets at prices reflecting current market conditions.

The five-member board, at a public meeting Thursday at its headquarters in Norwalk, Conn., was voting on final adoption of the changes. They would allow the assets to be valued at what the banks project they might sell for in the future, rather than in the current, distressed environment.

The mark-to-market rule, also known as fair value accounting, has forced banks to take steep write-downs on some financial assets -- especially securities linked to high-risk subprime mortgages -- as the industry has reeled from the housing market slump.

An estimated $2 trillion in soured assets is gumming up banks' books. As the financial crisis has ground on, more banks have foundered and failed. That's prompted the industry and lawmakers of both parties to push for the accounting relief and flexibility.

But some fear that companies will use the leeway to boost the value of the assets on their books to "unrealistic levels," Robert Willens, an expert on tax and accounting issues for Wall Street clients, told The Associated Press last week.

"The FASB's relaxation of these rules might come at the most inopportune time," he said.

In the short run, banks would benefit by raising the value of the assets. But higher values could drive away prospective private investors -- who don't like to overpay, even though the government will absorb most of the risk.

If the assets remain on banks' books, they may continue to be reluctant to lend as they fret over the assets' future performance. That could work against the purpose of the government's program: to break the logjam in lending and get the economy pumping again.

"Banks need to have flexibility" in valuing assets but the fair market rule shouldn't be scrapped, Sheila Bair, the chairman of the Federal Deposit Insurance Corp., told a gathering of bank executives Wednesday. "There needs to be integrity in those bank balance sheets."

The changes also would allow for "significant judgment" by bank managers to determine if a market isn't functioning. The executives then would have discretion over setting the value of the securities.

The new valuation guidelines could be applied in the current quarter.

Proponents of the mark-to-market rule argue that suspending or scrapping it -- as banking executives urged last fall -- would weaken transparency in companies' financial statements, hurting investors and the capital markets.

But critics say the rule mandates onerous write-downs and saps investor confidence in banks, not reflecting the true value of soured, mortgage-linked assets and the higher prices they may fetch in the future as the market recovers.

At a hearing last month, a House panel wrung a pledge from FASB Chairman Robert Herz to try to issue guidelines in three weeks that would relax the mark-to-market rule. The head of the House Financial Services subcommittee, Rep. Paul Kanjorski, D-Pa., had held out the threat of legislation to pressure the standard-setting board to take the steps.

thegreatgate · #5 04-02-2009, 10:12 AM

FASB makes adjustments to mark-to-market changes
WASHINGTON (Reuters) - U.S. accounting rulemakers on Thursday agreed to make adjustments to its proposal to change mark-to-market accounting rules concerning when transactions would be considered distressed. The Financial Accounting Standards Board said its proposed changes would take effect in the second quarter for most U.S. companies, but early adoption would be allowed for most companies' first quarter. The board, at a meeting in Norwalk, Connecticut, said it would remove a presumption in its original proposal that would have allowed all transactions in an inactive market to be considered distressed unless proven otherwise. It said that particular language could have had unintended consequences. FASB also said the objective of mark-to-market, or fair value accounting, in inactive markets would be to determine what an asset could fetch in an "orderly" transaction between market participants. It said an "orderly" transaction would not include distressed transactions or fire-sales. The board is continuing discussions on the rule and another rule on other-than-temporary impairment issues that affect when writedowns have to be taken on financial assets that have suffered a decline in value.
FASB makes adjustments to mark-to-market changes | U.S. | Reuters

**BadThad** · #6 04-02-2009, 12:22 PM

I hope this turns out to be a good thing!