Talk about MARK to MARKET rules
Sen. Dodd says could tweak mark-to-market
WASHINGTON (Reuters) - It might be possible to modify mark-to-market accounting rules for U.S. banks facing steep writedowns of troubled assets without abandoning the underlying accounting standard, a senior Senate Democrat said.
Sen. Christopher Dodd, the Democratic chairman of the Senate Banking Committee, told reporters on Wednesday evening after a panel hearing that at least one former bank regulator was discussing how to approach the difficult issue without "walking away from" mark-to-market standards.
The issue of how to value distressed assets held by U.S. banks has been one of the most difficult challenges in constructing a bank rescue plan, according to industry lobbyists and lawmakers.
It the government buys some bad assets as part of the rescue, it could force banks to drastically write down billions of similar assets. That could create further instability unless changes are made to the accounting rule which requires assets to be valued at market prices.
The Securities and Exchange Commission has already given the financial industry some wiggle room and has said hard-to-value assets do not have to be marked down to fire-sale prices.
The SEC and the accounting rulemaker, the Financial Accounting Standards Board, are working on more guidance to help banks determine the value of an asset when there is little or no market trading.
The Obama administration is expected to outline next week how it plans to handle the second $350 billion of a $700 billion financial rescue fund.
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