Well, the Financial Accounting Standards Board (FASB) has drunk the hemlock. They have now given banks the okay to value some securities not at what the market says their worth, but at what the bank believes the securities will be worth sometime in the future. To me, it's bizarre that they can even assign a value to a security no one wants to buy. But, hey, get with the program. We can't allow big banks to fail.
I suspect that a large factor in FASB's decision was the hard time Congress gave its chairman last month. Their buckling under to the 'wisdom' of the financial geniuses who bear some responsibility for the current catastrophe will eventually lead to the demise of any influence FASB has had.
In the words of BIll Donaldson and Arthur Levitt, “In order to create high-quality accounting standards, it is critical that the process be independent and free from political pressure. This will ensure that such standards are neutral and faithfully represent economic reality. To the extent that these new FASB proposals reduce the free flow of transparent and reliable financial information, they undermine investor interests and weaken their ability to make sound investment decisions.”
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