US accounting standards relaxed to help banks out of crisisApril 3rd, 2009 - 9:04 am ICT by IANS
Washington, April 3 (DPA) US accounting standards were relaxed Thursday to allow banks to take a longer-term view on the value of toxic mortgage assets, which have already cost the industry more than $1 trillion and lie at the heart of the financial crisis.
The Financial Accounting Standards Board (FASB), an industry group, voted that banks would not have to tie the value of mortgage securities to current market prices.
The value of bank mortgage holdings has been decimated by an unprecedented housing downturn that prompted millions of Americans to foreclose on their homes. But banks have long argued that their mortgage assets are still far healthier than investors are willing to acknowledge in the midst of the current financial turmoil.
The FASB changes, pushed by banks and also by US legislators, relax so-called “mark-to-market” accounting rules, giving banks greater discretion to decide the price of their “distressed” assets when they report quarterly earnings.
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