The nation’s accounting board agreed today to give more leeway to banks when assigning a dollar value to distressed assets, following an aggressive lobbying campaign by lawmakers and the financial industry to change the rules.
The move by the Financial Accounting Standards Board revises fair value, or mark-to-market, accounting, which has been blamed for exacerbating the financial crisis by forcing banks to value home loans and other assets below their worth.
But defenders of fair value accounting say it gives investors a transparent accounting of the real value of assets held by banks. Changing the rules, some say, will only give banks the chance to conceal how bad their financial conditions are.
This is nothing more than an official sanction to the falsification of financial statements. Sure am glad we learned our lesson. Let’s hear it for government regulation.