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22 May 2008
The top global banks have proposed to have fair-value rules relaxed in an effort to break down the 'downward spiral' of huge writedowns, fundraisings and fire-sales of assets.
The suggestions, from the Institute of International Finance – a grouping of more than 300 companies chaired by Deutsche Bank chairman Josef Ackermann – would allow financial companies to value illiquid assets at historical cost instead of at market value.
The suggested plan would also allow banks who kept assets on balance sheet, to be free of the requirement to hold them until maturity and so be released to sell such assets after two years, the FT reported.
The proposal has been sent for consideration to US and European central banks, governments and accounting watchdogs.
Further reading:
Off balance sheet structures too risky
PCAOB to carefully scrutinise securities valuations in accounts
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Briefings
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