This week’s blogs: independent voice

The Lords Select Committee on Economic Affairs said that: ‘Mark-to-market
accounting generates verifiable information about banks. Without it investors
would be less well-informed, and confidence would suffer in downturns.
Regulators should not abandon mark-to-market accounting, but supervisors must
identify ways to ensure that it does not amplify the economic cycle.’

The American Bankers Association sent a letter to the members of the USA’s
House Financial Services Committee expressing concern over mark-to-market and
impairment rules. ‘Mark-to-market does not provide the most relevant measurement
basis for many types of transactions… FASB’s emphasis on mark-to-market not
only results in misleading information in a distressed market, but it can also
result in misleading information in a typical market.’

Personally I prefer the independent view of the House of Lords.

Jeremy Newman, BDO Inter-national CEO

The Wall Street Journal Europe reports that the Chapter 11 bankruptcy filing
by General Motors will result in it leaving the Dow Jones Industrial Average

Bankruptcy disqualifies a company from the index. GM’s market capitalisation
­ now just 0.1% of the 30-share Dow’s weighting ­ won’t help much, either.

GM has been a fixture of the index since 1925 and popped in and out the index
during the Great War (but before the Yanks actually joined in).

Can’t help wondering what Alfred Sloan would have made of this corporate
giant’s fall from grace…

Andy Sawers, editor, Financial Director

While parliamentarians are obviously recognising tax as a headline issue, the
changes announced in the Budget will not, I believe, be enough on their own to
deal with the impact of the national debt. The tax spending side also needs to
be looked at very hard. Financial institutions will not be paying anything like
the same amounts on profits as they have in the last decade ­ how will the UK
close the gap?

Disproportionate policy or regulatory responses will exacerbate problems ­
and sweep up sound businesses which played no part in the overstretching and
excessive risk taking of recent times. I am encouraged by members’ support of
our political engagement: it enables us to remain an institution able to
encourage government to take the proportionate road.

Michael Izza, CEO, ICAEW

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