Academic journal article ABA Banking Journal

Q: Can FASB's Mark-to-Market Proposal Be Stopped? an Interview with Donna Fisher, ABA's Tax and Accounting Expert

Academic journal article ABA Banking Journal

Q: Can FASB's Mark-to-Market Proposal Be Stopped? an Interview with Donna Fisher, ABA's Tax and Accounting Expert

Article excerpt

ABABJ: What's the latest on FASB's mark-to-market accounting proposal?

Donna Fisher: FASB's proposal to require all financial instruments--including loans--to be marked to market on the balance sheet is out for comment. Comments are due by Sept. 30. Interestingly, the International Accounting Standards Board just adopted its final rule on the same issue. While the IASB rule would mark more securities to market than U.S. banks currently do, the board rejected the idea of marking loans to market.

ABABJ: So why is FASB pushing it?

DF: They believe that investors want it. One of the main groups of investors that they listen to--the Certified Financial Analyst Institute--is pushing it. But what we're hearing is that bank investors don't want it, and some of them are members of the CFA Institute. We've brought investors in to meet with ABA's Accounting Committee. We've called some investors individually. We've participated in investor calls with hundreds of investors on the line. They're correctly concerned about the negative effect mark-to-market would have on a bank's bottom line and how banks would be perceived in the market as a result.

ABABJ: Where are bank regulators on this?

DF: The U.S. and international regulators agree that loans shouldn't be marked to market.

ABABJ: What will be the consequence if the proposal goes through?

DF: This would represent the most significant change to bank accounting we have ever seen and will likely change banking as we know it. Lending products in particular could change dramatically. If you have to mark loans to market and be measured based on it by investors, regulators, and depositors, your products will change to adapt to those new rules. …

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