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Bank Association Calls for Fast Fair-Value Action

Tammy Whitehouse | September 24, 2008

As the U.S. Treasury continues to pitch its massive bank bailout proposal to a wary Congress, special interest groups are pummeling regulators with opposing views on whether action on fair-value accounting would help resolve the crisis.

The American Bankers Association appealed to Christopher Cox, chairman of the Securities and Exchange Commission, to provide “immediate guidance” that would say “intrinsic value or economic value are appropriate proxies for fair value.” Edward Yingling, president and CEO of the ABA, says in his letter to Cox that current fair-value accounting rules (he’s referring to Financial Accounting Standard No. 157 Fair Value Measurement) don’t adequately steer the measurement of fair value when markets are inactive. “When the market is not working properly then we must look to cash flows, as the ‘market’ price may...

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