FAS 157 giving US bankers a hard time
July 2, 2008
Courtesy of James Governor, I see the New York Times is coooking up a storm over the ‘fair value’ rules being applied under FAS 157. In one corner we have the US investment banks, distressed to find their assets over valued under FAS 157. In the other corner we have commenters, largely calling out Stephen Schwarzman, the chief executive of the giant private equity firm Blackstone Group. This comment sums up the general tenor (with variations):
Mr. Schwazman has a large financial stake and high visibility role in a public company subject to the accounting rule he objects to.
I suspect that Steve’s objections to this rule are based largely upon his concern that his personal wealth and/or image may be adversely affected by this accounting rule at some future time.
The article is lopsided with way too much attention given to the effects of the sub prime crisis on asset valuations. The real disappointment is that the author didn’t choose to get a view from any of the major audit firms which at least are taking a prudent view. For that they should be applauded, not pilloried by powerful lobbyists who don’t like what’s happening to their pocket books and are crying foul.
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