IASB: ‘take writedowns on sub-prime’

It is ‘not acceptable’ for banks to argue that debt instruments have become
too complex to value in the credit crunch, the International Accounting
Standards Board has said.

Tom Jones, the vice-chairman of the IASB, was quoted in the FT
today showing frustration at complaints that banks could not mark the
instruments to market, because there is no longer a market for them: ‘You need
fair value to get to the truth: the facts are the facts.’

‘The idea of people selling compound instruments, then saying they’re too
complex to value in a credit crunch – that’s not acceptable,’ he said. ‘People
[should] take the writedown now and, if markets come around again, they can mark
it up again.’

The credit crunch has proved a flashpoint in rows over fair value accounting.
Some have argued fair value
helped inflate the market
, while banks on Wall Street and elsewhere are now
wrestling with how to
the instruments

Further reading:

value: a fair cop?

Fair value fingered for
market crash

warning sounded

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