The fair value accounting rules that many people in the financial industry have cited as one of the main drivers for undervalued assets have been revised by the Financial Accounting Standards Board, according to numerous published reports.
A spokesperson for the FASB has confirmed the change and says the board will release a formal press statement this afternoon. The rule changes allow banks to apply the new mark-to-market guidance in the first quarter of 2009, Reuters reports. The new rules clarify when banks are required to take writedowns on impaired assets, Reuters adds.
It has been widely anticipated that the mark-to-market rules would be eased today. In mid-March, the FASB proposed changing the rules to allow firms the flexibility to price assets based on more normal circumstances rather than the amounts they would fetch in the current down market. The FASB's comment period on the proposal closed yesterday. SOURCE: Reuters