Asked for his opinion Thursday, Paulson waved off complaints that financial institutions are being forced to exaggerate investment losses because recent accounting rules require them to book assets at the latest market prices. Critics of fair-value requirements say today's volatile capital markets results in institutions showing more precarious financial straits than their true condition justifies. Paulson told the Exchequer Club in Washington that although "there are clear implementation issues" to the new rules, he doesn't think "throwing fair-value accounting out the window is the way to go."
"You're talking to someone who believes in fair-value accounting and mark-to-market accounting. I frankly don't know how someone even runs an investment bank without mark-to-market accounting and having proper controls in place. It would be a very dangerous path to drive down to say we don't like the result so we're going to change the accounting."
To end the credit crunch, losses must be recognized, and capital raised, he said. "One of the keys to raising capital is transparency and investors feeling more confident." -
Bill McConnell
Critics of fair-value accounting shouldn't ask Treasury Secretary Henry Paulson for support. 
