FASB to Fold on Mark to Market
Courtesy of Bruce Krasting
A board member at the FASB, Lawrence Smith, gave an interview with Reuters on the status of US accounting standards moving toward greater transparency. According to Smith this import change is not going to happen.
Why? Because the folks who have the most to lose by forced transparency have complained! What a stupid reason to fold by the FASB.
"Thus far, I think the count is up to about 1,500 or so comment letters," said Lawrence Smith, a board member of FASB, which sets U.S. accounting rules. "I think I’ve read one that supports what we propose."
So what if the letters are 1,500 to 1? That the banks and finance companies are writing all these letters is probably the best evidence that MTM is desperately needed.
Smith added that board members will probably be influenced by the opposition.
"If I were a betting person, I would bet on some type of hybrid model being adopted".
Well I am a betting person and I will bet that there will be no MTM from FASB. They will crater to their own constituency and do the wrong thing for the investing public, again.
This makes a joke of:
-The FASB
-The companies who wrote the letters
-The SEC
-The accounting profession
-FinReg, as it is proving to be a toothless set of regulations
-The US Treasury. (they did not write a letter)
-The Federal Reserve (who also did not write a letter) the Fed has been pushing on this issue and will not step up to the plate when necessary.
The banks are all afraid of MTM. They want to be able to hide an asset on their books that is worth 50 cents on the dollar and maintain it at 100 cents. When FASB blesses this insanity the banks will just abuse the rule to hide more junk.
So when you are out there buying bank stocks know that the assets you think are there have nothing to do with the fair value of those assets. That the financial statements you read are just a charade. You can draw no conclusions on the health of the company you are investing in. And that the FASB has blessed it and wants it that way. Caveat Emptor.
