FASB Eases Mark-to-Market Rules
As expected, the Financial Accounting Standards Board, or FASB, has voted to relax fair-value, or mark-to-market, rules. The change will go into effect in the second quarter and will not be retroactive.
The changes will allow banks to use "significant" judgement in valuing assets, instead of market prices. Analysts have said the move could boosts banks net income by 20% or more, although Bank of America's (NYSE: BAC) CEO Ken Lewis said this is too optimistic.
This ruling will affect various financial institutions like Bank of America (NYSE: BAC), JP Morgan (NYSE: JPM), Citigroup (NYSE: C) Wells Fargo (NYSE: WFC), Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS).
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