Lawmaker eyes recoupment of mark-to-market losses FDIC should be OK'ed to borrow $500 billion for insurance fund, Frank said By Ronald D. Orol, MarketWatch Last update: 12:51 p.m. EDT March 31, 2009 Comments: 47 WASHINGTON (MarketWatch) -- A key lawmaker on Tuesday told bankers he backs a number of efforts sought by the financial industry, including an approach that would allow institutions to recoup losses from controversial accounting rules and legislation that would give the Federal Deposit Insurance Corp. new borrowing authority. House Financial Services Committee Chairman Barney Frank, D-Mass., told bankers at an American Bankers Association conference in Washington that he would support a procedure for banks in some circumstances to recoup losses they have already taken due to controversial mark-to-market accounting rules. Frank said he believed that firms should be able to make the case that they have been forced to take losses on assets with good cash flow that they are holding to maturity and be able to remove those losses from their balance sheet. Mark-to-market rules are an accounting methodology that requires banks and other corporations to assign a value to an asset, such as mortgage securities, credit-card debt or student-loan investments, based on the current market price for either the security or a similar asset. Frank said he would talk to the Securities and Exchange Commission about a rule change regarding retroactive accounting. "They ought to be able to go back and say they took that loss on an asset that is being held to maturity and recoup that loss," Frank told a banker who asked him about retroactive losses. Bankers argue that they have already taken 90% of losses on held-to-maturity assets. Frank's comments come as the Financial Accounting Standards Board, which is overseen by the SEC, plans to vote on new guidance for mark-to-market rules on Thursday. Frank said he wants banks to have discretion and flexibility on how they apply the accounting rules.
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