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FASB Stands Firm on Market Pricing; Bankers Appeal

Tammy Whitehouse | October 14, 2008

The Financial Accounting Standards Board has finalized its crisis guidance on how to apply fair value measurement rules in the current, seized market environment, and the banking sector is already up in arms.

The American Bankers Association fired off another letter to Christopher Cox, chairman of the Securities and Exchange Commission, asking the SEC to nullify the fast-tracked guidance because it doesn’t give financial institutions the freedom they seek to overlook illiquidity in valuing securities.

“Regardless of the valuation technique used, an entity must include appropriate risk adjustments that market participants would make for non-performance and liquidity risks,” FASB wrote in its guidance. In its board meeting Friday to finalize the guidance, FASB staff emphasized and board members agreed...

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