The FASB, the independent corporate accounting standards board, is under attack. Believe this or not, financial lobbyists are trying to get it's independence dissolved so they can cook the books whenever they damn feel like it.
Amid the ongoing financial regulation overhaul, the banking industry is hoping to pull off a quiet power grab that has eluded its grasp since the Great Depression, by stripping the independence of the board that sets financial accounting standards.
The move could effectively let banks set their own accounting standards in rough economic times.
European Union ministers said it is “critical” that convergence on accounting standards is reached on the continent to ensure that the region’s banks are not placed at a disadvantage against U.S. competitors.
The International Accounting Standards Board, which writes the rules used in Europe, must cooperate with the U.S. Financial Accounting Standards Board, the ministers said in a statement today following a meeting of European finance ministers and central bankers in Prague. A goal is to avoid “competitive distortions,” they said.
Looks like the financial oligarchs are firmly in control of the nation. The FASB relaxed the rules:
The Financial Accounting Standards Board, pressured by U.S. lawmakers and financial companies, voted to relax fair-value rules that Citigroup Inc. and Wells Fargo & Co. say don’t work when markets are inactive.
The changes to so-called mark-to-market accounting allow companies to use “significant” judgment when gauging the price of some investments on their books, including mortgage-backed securities. Analysts say the measure may reduce banks’ writedowns and boost their first-quarter net income by 20 percent or more. FASB voted 3-2 to approve the rules at a meeting today in Norwalk, Connecticut.
There has been a lot of talk about the accounting concept of "mark-to-market" during this economic crisis. Some financial conglomerate defenders in the media have argued that "market-to-market" caused this crisis. Obviously, this far from the truth but financial conglomerates need to scapegoat something to cover for their complete incompetence. Financial Accounting Standards Board (FASB), the accounting board responsible for establishing financial accounting standards, was intensely lobbied by the banking industry to change the "market-to-market" rule. On March 16, FASB issued a change to "mark-to-market" rule that may improve financial conglomerates' profits instantly.
Honestly who believes the SEC at this point? But here it is:
The Securities and Exchange Commission yesterday rejected calls by banks to suspend an accounting rule blamed for exacerbating the financial crisis, saying the "fair- value" standard should instead be improved.
While the pundits threaten and promote Paulson's bail out plan, there are actually other things going on which Wall Street seems to like.
"News that the SEC is working with FASB [Financial Accounting Standards Board] on 'fair value' accounting rules that could delay implementation of the onerous mark-to-market provision are giving stocks fresh legs higher," according to analysts at Action Economics
Recent comments