The banking industry now has two powerful new tools in its accounting arsenal to cover up losses from bad loans and make balance sheets look more healthy.
As expected, the Financial Accounting Standards Board last week rushed through two pieces of guidance intended to help address the banks’ ongoing economic turmoil. The first steers entities away from using troubled market prices as they establish fair values for their assets; the other carves up losses related to troubled debt securities so that only a portion is recognized in earnings. A third piece of guidance also approved by the board calls for more ...