US banks have pleaded with regulators to immediately clarify fair value accounting rules, warning failure to do so would negate the government's efforts to bolster the financial sector.

In a letter addressed to Treasury Secretary Henry Paulson and copied to Christopher Cox, US Securities and Exchange Commission chairman; Ben Bernanke, Federal Reserve chairman; and Timothy Geithner, Federal Reserve Bank of New York president, the American Bankers Assocuation (ABA) urged SEC to clarify certain aspects of fair value accounting, which requires assets to be valued at market prices, Reuters reports.

ABA, which lobbies on behalf of all US banks and thrifts, said fair value accounting rules would undo much of the work of Treasury's capital purchase program.

'While the government makes billions of dollars available to increase capital, other policies simultaneously are needlessly, and wrongly, erasing billions of dollars in bank capital,' ABA said in the letter.

Further reading:

Experts back fair value for the US

SEC continues fair value investigation