Easing of Mark-to-Market Rule Would Undermine Treasury's War Against Toxic Assets
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The FASB will vote on a new proposal, FAS 157-e, on Thursday of this week. The proposed new rule will loosen mark-to-market standards for banks, allowing the companies to calculate their own values for most toxic assets which are now bubbling on their balance sheets.
The WSJ is running an interesting piece on the topic this morning, pointing out that the new rule, if approved, would completely undermine the U.S. Treasury's newest plan. So far, the Treasury has set aside $1 trillion to take impaired assets off bank's balance sheets, but the new FASB rule would promote just the opposite, giving bankers an incentive to leave troubled assets directly on their books. Effectively, as the WSJ article mentions, bankers may feel that such toxic assets could eventually turn out to be good.
The WSJ is running an interesting piece on the topic this morning, pointing out that the new rule, if approved, would completely undermine the U.S. Treasury's newest plan. So far, the Treasury has set aside $1 trillion to take impaired assets off bank's balance sheets, but the new FASB rule would promote just the opposite, giving bankers an incentive to leave troubled assets directly on their books. Effectively, as the WSJ article mentions, bankers may feel that such toxic assets could eventually turn out to be good.
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