Leading banks petition for relaxation of fair value
The relaxed rules would allow financial companies to value illiquid assets at historical cost instead of at market value
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
Use fair value but disclose more – Fitch