Apr
02
2009
Revisiting FAS 157, Again
Back in January we reported on how changes to FAS 157 were putting a hurt on financial institutions and many businesses. Now those rules are being softened, according to BusinessWeek.
After intense pressure from lawmakers and some factions of the financial industry, the Financial Accounting Standards Board (FASB) voted on Apr. 2 to make it easier for corporate management to value assets on their balance sheets with less regard for market prices.
Forbes has also weighed in on the revised rules. Forbes says not everyone is happy.
The problem is simple. Whatever the asset it, it has some value. In a distressed market the mark-to-market rule (just softened) meant that it was valued at fire sale prices. The problem now is how to keep banks from going back to what Forbes called "mark-to-fiction" prices that lead to bubbles in the financial market.
Because bubbles pop.
© lumaxart
Law | Greg Cruey | 02 April 2009 |
