Newsroom
Trade Groups Urge Geithner Not to Tamper With Fair Value Accounting in Rescue Plan
by BNA Daily Report for Executives (Subscription required for full article)
February 18, 2009
BNA reports auditing, investor, and consumer groups have urged the Obama administration, the Federal Reserve, the Securities and Exchange Commission, and members of Congress "to preserve fair value accounting as the administration develops its financial services sector rescue plan, the outlines of which were announced by Treasury Secretary Timothy Geithner Feb. 9."
"As the administration and Congress seek answers to the financial crisis, 'we caution against taking action that could further undermine the confidence of investors,' the groups said in their Feb. 13 letter,’" according to BNA. "The letter came from the Center for Audit Quality, the CFA Institute, the Consumer Federation of America, and the Council of Institutional Investors."
"'Changing financial accounting standards because of valuation challenges is not the way to solve regulatory capital problems,' the letter said. 'Retreating from fair value in response to political pressure would raise suspicions that the rules were changed in order to falsely inflate asset values. We must avoid a further crisis of investor confidence in our government and the regulatory bodies overseeing those institutions.'”
BNA also noted, "The four trade groups, which have teamed up previously in defense of fair value accounting, sent separate letters to Treasury and to lawmakers making the same point—that neither Congress nor the administration should interfere with the existing standards-setting apparatus, and that accounting standards ought not be fudged to make ailing financial institutions look better."
