Is FASB brain dead?

CFO.com reports that:

Without fully suspending fair value accounting to help banks weather the credit crisis, regulators and standard setters are now making it clear that financial institutions can avoid the so-called mark-to-market methodology — at least some of the time.

The latest clarification released by the Securities and Exchange Commission and the Financial Accounting Standards Board points out that banks that issue stock warrants to the government, as part of the Treasury Department’s Capital Purchase Program, will not have to value the warrants using fair value accounting. As a result, banks won’t have to absorb potential losses if the market value of the instruments decline.

I am lost for words to describe just how asinine this measure really is. Might as well just shove them on the balance sheet as permanent capital. Nobody is going to care-  are they?

Related articles by Zemanta

• FASB in talks with SEC on fair value
• SEC roundtable clash over fair value
• Banks get accounting break
• Fair-value accounting: Here to stay
• Don’t blame accountants for this mess