McCreevy calls for urgency on fair value suspension

EU internal markets commissioner Carlie McCreevy had asked Brussels to make
urgent changes to accounting rules providing European banks more flexibility
over the way they treat certain assets.

‘We are urgently putting forward changes to our accounting rules to ensure
banks in the EU can avail of the same flexibility that is offered to banks in
the US – namely, this will provide the option for individual banks if they want
to move assets from their trading books to their banking books,’ McCreevy told
the European parliament.

He suggested that, while the changes were being processed, national
supervisors should apply the measure at local country level to allow banks
making use of it when preparing third quarter results, enabling valuation of
illiquid assets closer to the purchase price than the current price, thus easing
pressure on their balance sheets, the Financial Times reports.

McCreevy referred to the International Accounting Standard Board’s acceptance
of USA’s recent guidance which means American banks do not need to mark illiquid
assets to market prices. ‘This is also highly relevant for banks and should be
used for third quarter reporting,’ he said.

Further reading:

Ex AIG chief blames mark-to-market for losses

Fair value suspension branded ‘stupid’

the Financial Times story

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