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As the Securities and Exchange Commission prepares for yet another roundtable discussion
on fair value or mark-to-market accounting, Robert Denham, chairman of
the Financial Accounting Foundation, is urging SEC Chairman Christopher
Cox (pictured) to reject any attempt to suspend the accounting rule.
In a letter dated Oct. 27, Denham tells Cox that the FAF is aware of "new appeals," made directly to the SEC to:
"We acknowledge that the current financial crisis is testing the limits of investor confidence. ... However, we believe that action by the SEC to overturn a FASB standard ... and political pressure from some industry interest groups ... will exacerbate investor concerns about the reliability of financial information and further erode market conditions." Copies of the letter were sent to Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corp. Chair Sheila Bair, Comptroller of the Currency John Dugan and Office of Thrift Supervision Director John Reich. Denham sent a similar letter earlier this month to Rep. Barney Frank, the Democratic chairman of the House Financial Services Committee stating, that legislation to overturn FAS 157 would not only undermine investor confidence but threatens the independent process of establishing accounting rules. Mark-to-market accounting requires firms to value securities they hold at market prices, rather than the price at which they were purchased or some other value. Regulators put the rules in place to keep companies from hiding losses. While supporters of the rule say only full disclosure will satisfy investors who are leaving the markets in droves, critics contend it can exacerbate problems for firms holding the complex, rarely traded securities that are at the heart of the current crisis. William Isaacs, a former chairman of the FDIC, will be among the participants at the SEC roundtable Wednesday. He has been among those calling for the repeal of the mark-to-market rules, saying they have led to a $5 trillion reduction in lending by U.S. financial firms. Among others attending will be representatives from accounting firms PricewaterhouseCoopers LLP and Grant Thornton LLP as well as observers from the Treasury Department, the International Accounting Standards Board, the FASB and the Public Accounting Oversight Board. - Donna Block See FAF letter to Chris Cox Categories Deal Video
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