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Bank accounting rules may change
US rules technically allow banks in “rare circumstances” to reclassify financial instruments from their trading book, where they are reported at current market price, to the “held to maturity” category.

Politicians rail against fair value accounting - Oct-01IASB calls credit crunch meeting - Sep-23Accounting experts push fair value rules - Sep-16In depth: Accounting standards - Aug-28Editorial comment: International codes - Aug-28SEC plans for global accounting standards - Aug-27If used, the rule could permit US banks to boost their balance sheets by allowing them to revalue debt-linked securities at the heart of the crisis.

Instead of the current weak market prices, they could base values on their expected total value by the time they mature.

The International Accounting Standard Board said on Friday it would immediately consider changing its own rules, followed by all European banks, to match the US standards.

It also said it would work closely with its US counterpart, the Financial Accounting Standards Board, to develop a common approach to accounting issues raised by any bail-out plan.

Accounting rulemakers have come under unprecedented pressure to ease their rules on “fair value” – the practice of marking assets to market prices.

Many banks and insurers complain that the rules have forced them to write down billions in the value of their holdings – even though they expect those securities to increase in value once markets improve.

Instead of market prices, they would like to report more of their holdings at their own internal estimates of what the assets might finally be worth.

Copyright The Financial Times Limited 2008

Source: http://The Financial Times Limited 2008
Category: world real estate | Added by: (2008-10-05)
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