The FASB is under attack by banking lobbyists

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.

This article, Civil War In Corporate America: Banks Battling The Chamber On Accounting Rules outlines these latest attempts.

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.

The EU Wants to Relax Mark-to-Market Rules

Now that the United States has relaxed mark-to-market rules, now Europe does too?

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.

FASB pressured into mark to market changes

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.

Poof! Instant profits.

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.

The Wall Street Come Back - Due to SEC Possible Change of Accounting Rules Mark-to-Market

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

From CBS Market Watch.

SEC and FASB in negotiations: