On MTM, insolvency, and market over-corrections

[davelj]

I haven’t posted in a while and I wanted to cram a few things into one post.

I’m skeptical regarding the extent of this rally in equities (but not the rally itself), but a few comments and observations.

(1) Mark-to-market: This accounting change really just amounts to “regulatory forbearance” (or capital forbearance, if you will). I’m sympathetic to those who want to use a strict adherence to MTM, but… as a taxpayer I’m MORE sympathetic to any regulatory moves that will lessen my liability vis-à-vis the banks. My preference is for the 70%-80% of the big banks’ business that’s profitable to fill the hole of the 20%-30% that’s somewhere between unprofitable and a black hole. Yes, this will take several years – and will result in balance sheets that are shrinking (oh no, Zombie Banks!!) – but this deleveraging is necessary. And, frankly, I’d rather give the banks time to fix their own problems (back to the percentages above) as opposed to have private equity buy these assets at a discount (using taxpayer money as financing!) and make the profit (at taxpayer expense).

One last comment on MTM. One of the biggest problems with valuing the “toxic” assets on banks’ balance sheets is the relative cost of funds between the banks that own them and the PE (or PE-like) firms that bid on them. Even if the two parties agree on the most likely set of cash flows, the sellers’ (banks) cost of funds is maybe 2% these days, so they only need to generate a 5% yield to make a little money on these assets. Which is why they value (via mark-to-model) a lot of these securities in the 70s and 80s. The buyers (PE), on the other hand, (a) can’t leverage like a bank, and (b) are using unleveraged discount rates of 20%+ to value the cash flows. That’s why their bids are in the 40s. Again, cash flows may be in minor dispute, but the much larger issue is that the rates being used to discount the expected cash flows vary by 1500 basis points plus – thus the enormous bid/ask spread. The PPIP is an effort to offer low-cost leverage to PE firms to close this spread.

Again, personally I’d rather let the banks work these assets out – for better or worse – rather than use taxpayer money (via PPIP) to subsidize PE firms buying these assets. Why do I want to subsidize PIMCO, Goldman and John Paulson? I’m already into the banks up the wazoo.

(2) On “insolvency”: Yes, several of the big banks are certainly technically insolvent. That is, insolvent in the sense that they can’t currently liquidate their assets – even in an orderly manner – and fulfill their obligations to depositors and other creditors. However, this definition of insolvency is misleading because it presumes that these banks can NEVER meet these obligations. This is likely incorrect. Back to my comment above, those portions of these banks’ businesses that are profitable can over time fill the hole for those portions that are filled with holes. This is likely measured in years, not decades. For instance, take the example of a surgeon that has just graduated from medical school and started a practice. Between student loans and the cost of equipment, liability insurance, and perhaps even a house (!), etc., the good doctor is probably at least $500K underwater – and probably a whole lot more. The good doctor is technically insolvent. Big time. But so long as the doctor’s earnings power going forward is strong enough, then within several years the doctor has a positive net worth and is solvent again. That is, the doctor is able to “fill the hole” over time with earnings. Most of the big banks are no different.

(3) On post-Bubble overcorrection and reversion-to-the-mean: As Jeremy Grantham has pointed out time and time again, one of the very few truisms in finance is that every asset market eventually reverts back to its long-term trend. Every single one. Without exception. But where overcorrections are concerned, there is merely a TENDENCY to overcorrect – it’s not a given. If you go back and look at the 29 bubbles of the post-WWII period that Grantham has evaluated what you find is that some of the bubbles had big time overcorrection on the downside, but several also corrected only modestly below trend before reverting back to the long-term trend. My point is that there’s no guarantee of “bubble symmetry” where valuations are concerned. I think a lot of folks’ logic is, “Well, if we were overvalued by X% then we must become undervalued by X% as well.” History doesn’t support this view. It’s possible, but not probable. At S&P 676, we were almost 30% below long-term fair value (using Grantham’s methodology), which is a significant overcorrection by historical standards. Nowhere is it written that because we were 60% overvalued at one point, then we must at some point be 60% undervalued before The Bottom has been reached. Again, it’s possible. But not necessarily probable. I would apply the same logic to the housing market. We’re heading back to trend no matter what the government does. But how far we overcorrect is pure conjecture. And given the government’s efforts to limit the downside, I wouldn’t bet on seeing 1995 prices. Possible, yes. Probable, no.

Again, I think we should expect this rally in equities to fizzle to some extent. It feels like way too much way too soon. Having said that, almost everyone I know in the business thinks this is a sucker’s bear market rally (as do most Piggs, I surmise). Which is precisely why it probably isn’t.

Jim Cramer has been so wrong for so long that at some point he will probably get something right in the same way that even a stopped clock is right twice a day. He’s proclaiming that we’ve seen the bottom – which in prior times I’d take as a contrary indicator. But now I think his opinion may be so loathed and doubted that he may actually be right. I know, that’s bizarre logic, but…

As I posted a few weeks back, we MAY have seen The Bottom for stocks (I’ve revised my unscientific estimate up slightly to 65/35 odds) back at S&P 676. Obviously, we’re going to see a lot more bad economic news. Horribly horrific news. But the market doesn’t rally when there’s a light at the end of the tunnel. It rallies when one day is just a shade less black than the previous day. By the time there’s a light at the end of the tunnel, we’ll have seen an enormous rally (bigger than the one we’ve seen here) and most will have missed it (just as hardly anyone sold at the top – anyone with a brain had sold years prior, and those who believed in the “new era” never stopped believing and rode things into the toilet). The objective of asset markets is to get you bullish at the top, bearish at the bottom, and confused in between.

Pardon the length of the post.

[jpinpb]

Washington Post – New Accounting Rules

The board that sets U.S. accounting rules voted yesterday to let financial firms report higher values for some troubled assets, a controversial step likely to increase some banks’ reported earnings but also heighten suspicions that the companies are concealing problems.

The move by the Financial Accounting Standards Board was made with unusual speed under intense pressure from Congress and the financial industry, which have argued that the old rules exacerbated the financial crisis by forcing banks to overstate expected losses.

But the decision to ease what are known as mark-to-market requirements has raised concerns among some financial experts who warn that it will become harder for banks and investors to agree on what the troubled assets are actually worth and thus discourage their sale. The ability of financial firms to sell assets to investors is considered essential for an economic revival because this could restore the major source of funding for bank lending to consumers and businesses.

The board also has faced a storm of criticism from accounting and investor groups who view yesterday’s move as evidence that it lacks the necessary independence and strength to uphold its judgments in the face of pressure. The nonprofit board, whose decisions are enforced by the Securities and Exchange Commission, proposed the changes four days after it was told to do so by angry members of Congress.

“I was very disappointed in the process in that the independent agency buckled to the strong-armed tactics of Congress,” said Arthur Levitt, a former SEC chairman. “This is a step toward the kind of opaqueness that created the economic problems that we’re enduring today.”

A spokesman for FASB, based in Connecticut, said the board was responding appropriately to an extraordinary economic crisis.

“Our decisions rarely please everyone, but we believe that we have helped market participants this week with this action,” said the spokesman, Neal McGarity.

The new rules, which will be published next week, broaden an existing exception to the basic accounting principle that an asset is worth the price that a buyer is willing to pay. This valuation system is called marking to market, and the result is described as a fair value. Companies must disclose the fair value assets that they’re willing to sell in quarterly reports.

When a market does not exist — when there are no buyers for a particular kind of asset — companies can assign values based on other considerations, such as the amount originally paid for the asset, and any income it produces, such as a borrower’s payments on a mortgage. The change made yesterday allows companies to assert the same exception by arguing that the market is broken — that prices offered by investors for some securities do not reflect the real value of those assets.

The change is important because banks are required to set aside money when an asset declines in value, since the drop reflects a projected loss. It is expected that banks will use this exception to argue that the market prices for some assets are too low, and that they should be allowed to set aside less money.

In part, the impact of the change depends on whether the banks’ valuations are correct, according to financial analysts. If losses are smaller than the market has projected, banks will have more money in the short term, which could allow them to increase lending and attract investors, while maintaining adequate reserves against losses.

However, if investors believe banks are overpricing assets, “the capital markets will remain closed to major banks and other financial intermediaries for an extended period of time,” the CFA Institute, an investor advisory organization, said in an analysis. The group, which opposed the change, said “investors will not be willing to commit capital to firms that hide the economic value of their assets and liabilities.”

The volume of assets affected by the change will not become clear until companies report first-quarter earnings. Robert Willens, an accounting expert, estimates the change could boost earnings at some banks by as much as 20 percent. However, Citigroup and Bank of America said they expected the change would not impact their financial results.

The board couldn’t clarify yesterday whether banks will need to tell investors how much assets would have been worth under the old rules. The proposal must still be hammered into detailed instructions.

The financial industry and Congress have been lobbying FASB for the changes — with several lawmakers threatening to usurp the board’s powers if it didn’t act. FASB Chairman Robert Herz faced outraged lawmakers at a March 12 hearing where he pledged quick action.

The board has faced political pressure before. During the savings and loan failures of the 1980s, bank executives came knocking on the SEC and FASB’s doors, asking for changes to fair-value accounting. The SEC chairman at the time, Richard Breeden, refused to budge, said former SEC chief accountant, Lynn Turner.

SEC Chairman Mary L. Schapiro “needed to come out and tell Congress to keep their nose out of it,” Turner said.

Schapiro wasn’t available to comment yesterday. Her spokesman, John Nester, said: “Our principal focus was that the FASB address an issue raised several months ago, that they promptly seek public comment and that they provide guidance to issuers. We respect their independent judgment and will monitor the application of the new guidance.”

KPBS- Fair or Foul? spoke with Washington Post’s Binyamin Appelbaum.

[jpinpb]

Washington Post – New Accounting Rules

The board that sets U.S. accounting rules voted yesterday to let financial firms report higher values for some troubled assets, a controversial step likely to increase some banks’ reported earnings but also heighten suspicions that the companies are concealing problems.

The move by the Financial Accounting Standards Board was made with unusual speed under intense pressure from Congress and the financial industry, which have argued that the old rules exacerbated the financial crisis by forcing banks to overstate expected losses.

But the decision to ease what are known as mark-to-market requirements has raised concerns among some financial experts who warn that it will become harder for banks and investors to agree on what the troubled assets are actually worth and thus discourage their sale. The ability of financial firms to sell assets to investors is considered essential for an economic revival because this could restore the major source of funding for bank lending to consumers and businesses.

The board also has faced a storm of criticism from accounting and investor groups who view yesterday’s move as evidence that it lacks the necessary independence and strength to uphold its judgments in the face of pressure. The nonprofit board, whose decisions are enforced by the Securities and Exchange Commission, proposed the changes four days after it was told to do so by angry members of Congress.

“I was very disappointed in the process in that the independent agency buckled to the strong-armed tactics of Congress,” said Arthur Levitt, a former SEC chairman. “This is a step toward the kind of opaqueness that created the economic problems that we’re enduring today.”

A spokesman for FASB, based in Connecticut, said the board was responding appropriately to an extraordinary economic crisis.

“Our decisions rarely please everyone, but we believe that we have helped market participants this week with this action,” said the spokesman, Neal McGarity.

The new rules, which will be published next week, broaden an existing exception to the basic accounting principle that an asset is worth the price that a buyer is willing to pay. This valuation system is called marking to market, and the result is described as a fair value. Companies must disclose the fair value assets that they’re willing to sell in quarterly reports.

When a market does not exist — when there are no buyers for a particular kind of asset — companies can assign values based on other considerations, such as the amount originally paid for the asset, and any income it produces, such as a borrower’s payments on a mortgage. The change made yesterday allows companies to assert the same exception by arguing that the market is broken — that prices offered by investors for some securities do not reflect the real value of those assets.

The change is important because banks are required to set aside money when an asset declines in value, since the drop reflects a projected loss. It is expected that banks will use this exception to argue that the market prices for some assets are too low, and that they should be allowed to set aside less money.

In part, the impact of the change depends on whether the banks’ valuations are correct, according to financial analysts. If losses are smaller than the market has projected, banks will have more money in the short term, which could allow them to increase lending and attract investors, while maintaining adequate reserves against losses.

However, if investors believe banks are overpricing assets, “the capital markets will remain closed to major banks and other financial intermediaries for an extended period of time,” the CFA Institute, an investor advisory organization, said in an analysis. The group, which opposed the change, said “investors will not be willing to commit capital to firms that hide the economic value of their assets and liabilities.”

The volume of assets affected by the change will not become clear until companies report first-quarter earnings. Robert Willens, an accounting expert, estimates the change could boost earnings at some banks by as much as 20 percent. However, Citigroup and Bank of America said they expected the change would not impact their financial results.

The board couldn’t clarify yesterday whether banks will need to tell investors how much assets would have been worth under the old rules. The proposal must still be hammered into detailed instructions.

The financial industry and Congress have been lobbying FASB for the changes — with several lawmakers threatening to usurp the board’s powers if it didn’t act. FASB Chairman Robert Herz faced outraged lawmakers at a March 12 hearing where he pledged quick action.

The board has faced political pressure before. During the savings and loan failures of the 1980s, bank executives came knocking on the SEC and FASB’s doors, asking for changes to fair-value accounting. The SEC chairman at the time, Richard Breeden, refused to budge, said former SEC chief accountant, Lynn Turner.

SEC Chairman Mary L. Schapiro “needed to come out and tell Congress to keep their nose out of it,” Turner said.

Schapiro wasn’t available to comment yesterday. Her spokesman, John Nester, said: “Our principal focus was that the FASB address an issue raised several months ago, that they promptly seek public comment and that they provide guidance to issuers. We respect their independent judgment and will monitor the application of the new guidance.”

KPBS- Fair or Foul? spoke with Washington Post’s Binyamin Appelbaum.

[jpinpb]

Washington Post – New Accounting Rules

The board that sets U.S. accounting rules voted yesterday to let financial firms report higher values for some troubled assets, a controversial step likely to increase some banks’ reported earnings but also heighten suspicions that the companies are concealing problems.

The move by the Financial Accounting Standards Board was made with unusual speed under intense pressure from Congress and the financial industry, which have argued that the old rules exacerbated the financial crisis by forcing banks to overstate expected losses.

But the decision to ease what are known as mark-to-market requirements has raised concerns among some financial experts who warn that it will become harder for banks and investors to agree on what the troubled assets are actually worth and thus discourage their sale. The ability of financial firms to sell assets to investors is considered essential for an economic revival because this could restore the major source of funding for bank lending to consumers and businesses.

The board also has faced a storm of criticism from accounting and investor groups who view yesterday’s move as evidence that it lacks the necessary independence and strength to uphold its judgments in the face of pressure. The nonprofit board, whose decisions are enforced by the Securities and Exchange Commission, proposed the changes four days after it was told to do so by angry members of Congress.

“I was very disappointed in the process in that the independent agency buckled to the strong-armed tactics of Congress,” said Arthur Levitt, a former SEC chairman. “This is a step toward the kind of opaqueness that created the economic problems that we’re enduring today.”

A spokesman for FASB, based in Connecticut, said the board was responding appropriately to an extraordinary economic crisis.

“Our decisions rarely please everyone, but we believe that we have helped market participants this week with this action,” said the spokesman, Neal McGarity.

The new rules, which will be published next week, broaden an existing exception to the basic accounting principle that an asset is worth the price that a buyer is willing to pay. This valuation system is called marking to market, and the result is described as a fair value. Companies must disclose the fair value assets that they’re willing to sell in quarterly reports.

When a market does not exist — when there are no buyers for a particular kind of asset — companies can assign values based on other considerations, such as the amount originally paid for the asset, and any income it produces, such as a borrower’s payments on a mortgage. The change made yesterday allows companies to assert the same exception by arguing that the market is broken — that prices offered by investors for some securities do not reflect the real value of those assets.

The change is important because banks are required to set aside money when an asset declines in value, since the drop reflects a projected loss. It is expected that banks will use this exception to argue that the market prices for some assets are too low, and that they should be allowed to set aside less money.

In part, the impact of the change depends on whether the banks’ valuations are correct, according to financial analysts. If losses are smaller than the market has projected, banks will have more money in the short term, which could allow them to increase lending and attract investors, while maintaining adequate reserves against losses.

However, if investors believe banks are overpricing assets, “the capital markets will remain closed to major banks and other financial intermediaries for an extended period of time,” the CFA Institute, an investor advisory organization, said in an analysis. The group, which opposed the change, said “investors will not be willing to commit capital to firms that hide the economic value of their assets and liabilities.”

The volume of assets affected by the change will not become clear until companies report first-quarter earnings. Robert Willens, an accounting expert, estimates the change could boost earnings at some banks by as much as 20 percent. However, Citigroup and Bank of America said they expected the change would not impact their financial results.

The board couldn’t clarify yesterday whether banks will need to tell investors how much assets would have been worth under the old rules. The proposal must still be hammered into detailed instructions.

The financial industry and Congress have been lobbying FASB for the changes — with several lawmakers threatening to usurp the board’s powers if it didn’t act. FASB Chairman Robert Herz faced outraged lawmakers at a March 12 hearing where he pledged quick action.

The board has faced political pressure before. During the savings and loan failures of the 1980s, bank executives came knocking on the SEC and FASB’s doors, asking for changes to fair-value accounting. The SEC chairman at the time, Richard Breeden, refused to budge, said former SEC chief accountant, Lynn Turner.

SEC Chairman Mary L. Schapiro “needed to come out and tell Congress to keep their nose out of it,” Turner said.

Schapiro wasn’t available to comment yesterday. Her spokesman, John Nester, said: “Our principal focus was that the FASB address an issue raised several months ago, that they promptly seek public comment and that they provide guidance to issuers. We respect their independent judgment and will monitor the application of the new guidance.”

KPBS- Fair or Foul? spoke with Washington Post’s Binyamin Appelbaum.

[jpinpb]

Washington Post – New Accounting Rules

The board that sets U.S. accounting rules voted yesterday to let financial firms report higher values for some troubled assets, a controversial step likely to increase some banks’ reported earnings but also heighten suspicions that the companies are concealing problems.

The move by the Financial Accounting Standards Board was made with unusual speed under intense pressure from Congress and the financial industry, which have argued that the old rules exacerbated the financial crisis by forcing banks to overstate expected losses.

But the decision to ease what are known as mark-to-market requirements has raised concerns among some financial experts who warn that it will become harder for banks and investors to agree on what the troubled assets are actually worth and thus discourage their sale. The ability of financial firms to sell assets to investors is considered essential for an economic revival because this could restore the major source of funding for bank lending to consumers and businesses.

The board also has faced a storm of criticism from accounting and investor groups who view yesterday’s move as evidence that it lacks the necessary independence and strength to uphold its judgments in the face of pressure. The nonprofit board, whose decisions are enforced by the Securities and Exchange Commission, proposed the changes four days after it was told to do so by angry members of Congress.

“I was very disappointed in the process in that the independent agency buckled to the strong-armed tactics of Congress,” said Arthur Levitt, a former SEC chairman. “This is a step toward the kind of opaqueness that created the economic problems that we’re enduring today.”

A spokesman for FASB, based in Connecticut, said the board was responding appropriately to an extraordinary economic crisis.

“Our decisions rarely please everyone, but we believe that we have helped market participants this week with this action,” said the spokesman, Neal McGarity.

The new rules, which will be published next week, broaden an existing exception to the basic accounting principle that an asset is worth the price that a buyer is willing to pay. This valuation system is called marking to market, and the result is described as a fair value. Companies must disclose the fair value assets that they’re willing to sell in quarterly reports.

When a market does not exist — when there are no buyers for a particular kind of asset — companies can assign values based on other considerations, such as the amount originally paid for the asset, and any income it produces, such as a borrower’s payments on a mortgage. The change made yesterday allows companies to assert the same exception by arguing that the market is broken — that prices offered by investors for some securities do not reflect the real value of those assets.

The change is important because banks are required to set aside money when an asset declines in value, since the drop reflects a projected loss. It is expected that banks will use this exception to argue that the market prices for some assets are too low, and that they should be allowed to set aside less money.

In part, the impact of the change depends on whether the banks’ valuations are correct, according to financial analysts. If losses are smaller than the market has projected, banks will have more money in the short term, which could allow them to increase lending and attract investors, while maintaining adequate reserves against losses.

However, if investors believe banks are overpricing assets, “the capital markets will remain closed to major banks and other financial intermediaries for an extended period of time,” the CFA Institute, an investor advisory organization, said in an analysis. The group, which opposed the change, said “investors will not be willing to commit capital to firms that hide the economic value of their assets and liabilities.”

The volume of assets affected by the change will not become clear until companies report first-quarter earnings. Robert Willens, an accounting expert, estimates the change could boost earnings at some banks by as much as 20 percent. However, Citigroup and Bank of America said they expected the change would not impact their financial results.

The board couldn’t clarify yesterday whether banks will need to tell investors how much assets would have been worth under the old rules. The proposal must still be hammered into detailed instructions.

The financial industry and Congress have been lobbying FASB for the changes — with several lawmakers threatening to usurp the board’s powers if it didn’t act. FASB Chairman Robert Herz faced outraged lawmakers at a March 12 hearing where he pledged quick action.

The board has faced political pressure before. During the savings and loan failures of the 1980s, bank executives came knocking on the SEC and FASB’s doors, asking for changes to fair-value accounting. The SEC chairman at the time, Richard Breeden, refused to budge, said former SEC chief accountant, Lynn Turner.

SEC Chairman Mary L. Schapiro “needed to come out and tell Congress to keep their nose out of it,” Turner said.

Schapiro wasn’t available to comment yesterday. Her spokesman, John Nester, said: “Our principal focus was that the FASB address an issue raised several months ago, that they promptly seek public comment and that they provide guidance to issuers. We respect their independent judgment and will monitor the application of the new guidance.”

KPBS- Fair or Foul? spoke with Washington Post’s Binyamin Appelbaum.

[jpinpb]

Washington Post – New Accounting Rules

The board that sets U.S. accounting rules voted yesterday to let financial firms report higher values for some troubled assets, a controversial step likely to increase some banks’ reported earnings but also heighten suspicions that the companies are concealing problems.

The move by the Financial Accounting Standards Board was made with unusual speed under intense pressure from Congress and the financial industry, which have argued that the old rules exacerbated the financial crisis by forcing banks to overstate expected losses.

But the decision to ease what are known as mark-to-market requirements has raised concerns among some financial experts who warn that it will become harder for banks and investors to agree on what the troubled assets are actually worth and thus discourage their sale. The ability of financial firms to sell assets to investors is considered essential for an economic revival because this could restore the major source of funding for bank lending to consumers and businesses.

The board also has faced a storm of criticism from accounting and investor groups who view yesterday’s move as evidence that it lacks the necessary independence and strength to uphold its judgments in the face of pressure. The nonprofit board, whose decisions are enforced by the Securities and Exchange Commission, proposed the changes four days after it was told to do so by angry members of Congress.

“I was very disappointed in the process in that the independent agency buckled to the strong-armed tactics of Congress,” said Arthur Levitt, a former SEC chairman. “This is a step toward the kind of opaqueness that created the economic problems that we’re enduring today.”

A spokesman for FASB, based in Connecticut, said the board was responding appropriately to an extraordinary economic crisis.

“Our decisions rarely please everyone, but we believe that we have helped market participants this week with this action,” said the spokesman, Neal McGarity.

The new rules, which will be published next week, broaden an existing exception to the basic accounting principle that an asset is worth the price that a buyer is willing to pay. This valuation system is called marking to market, and the result is described as a fair value. Companies must disclose the fair value assets that they’re willing to sell in quarterly reports.

When a market does not exist — when there are no buyers for a particular kind of asset — companies can assign values based on other considerations, such as the amount originally paid for the asset, and any income it produces, such as a borrower’s payments on a mortgage. The change made yesterday allows companies to assert the same exception by arguing that the market is broken — that prices offered by investors for some securities do not reflect the real value of those assets.

The change is important because banks are required to set aside money when an asset declines in value, since the drop reflects a projected loss. It is expected that banks will use this exception to argue that the market prices for some assets are too low, and that they should be allowed to set aside less money.

In part, the impact of the change depends on whether the banks’ valuations are correct, according to financial analysts. If losses are smaller than the market has projected, banks will have more money in the short term, which could allow them to increase lending and attract investors, while maintaining adequate reserves against losses.

However, if investors believe banks are overpricing assets, “the capital markets will remain closed to major banks and other financial intermediaries for an extended period of time,” the CFA Institute, an investor advisory organization, said in an analysis. The group, which opposed the change, said “investors will not be willing to commit capital to firms that hide the economic value of their assets and liabilities.”

The volume of assets affected by the change will not become clear until companies report first-quarter earnings. Robert Willens, an accounting expert, estimates the change could boost earnings at some banks by as much as 20 percent. However, Citigroup and Bank of America said they expected the change would not impact their financial results.

The board couldn’t clarify yesterday whether banks will need to tell investors how much assets would have been worth under the old rules. The proposal must still be hammered into detailed instructions.

The financial industry and Congress have been lobbying FASB for the changes — with several lawmakers threatening to usurp the board’s powers if it didn’t act. FASB Chairman Robert Herz faced outraged lawmakers at a March 12 hearing where he pledged quick action.

The board has faced political pressure before. During the savings and loan failures of the 1980s, bank executives came knocking on the SEC and FASB’s doors, asking for changes to fair-value accounting. The SEC chairman at the time, Richard Breeden, refused to budge, said former SEC chief accountant, Lynn Turner.

SEC Chairman Mary L. Schapiro “needed to come out and tell Congress to keep their nose out of it,” Turner said.

Schapiro wasn’t available to comment yesterday. Her spokesman, John Nester, said: “Our principal focus was that the FASB address an issue raised several months ago, that they promptly seek public comment and that they provide guidance to issuers. We respect their independent judgment and will monitor the application of the new guidance.”

KPBS- Fair or Foul? spoke with Washington Post’s Binyamin Appelbaum.

[davelj]

Your bolded points are Blinding Glimpses of the Obvious, jp. Not wrong. Just obvious.

[davelj]

Your bolded points are Blinding Glimpses of the Obvious, jp. Not wrong. Just obvious.

[davelj]

Your bolded points are Blinding Glimpses of the Obvious, jp. Not wrong. Just obvious.

[davelj]

Your bolded points are Blinding Glimpses of the Obvious, jp. Not wrong. Just obvious.

[davelj]

Your bolded points are Blinding Glimpses of the Obvious, jp. Not wrong. Just obvious.

[jpinpb]

Yes, I know. Just wanted to highlight it so if someone didn’t want to read the whole thing, at least they’ll get the gist.

[jpinpb]

Yes, I know. Just wanted to highlight it so if someone didn’t want to read the whole thing, at least they’ll get the gist.

[jpinpb]

Yes, I know. Just wanted to highlight it so if someone didn’t want to read the whole thing, at least they’ll get the gist.

[jpinpb]

Yes, I know. Just wanted to highlight it so if someone didn’t want to read the whole thing, at least they’ll get the gist.

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