U.S. accounting standard-setters bowed to congressional and banking industry pressure Thursday and allowed more flexibility in valuing toxic assets that have forced billions of dollars in writedowns.
The five-member Financial Accounting Standards Board voted unanimously to let banks exercise more judgment in mark-to-market accounting, to determine whether a transaction is distressed and a market is inactive.
But in a move that would help many U.S. banks report stronger results, the board split 3-2 in approving guidance that would let lenders take smaller losses on impaired assets available for sale.
"I think this is an improvement," FASB Chairman Robert Herz said of the changes during FASB's three-hour meeting in a drab boardroom that was filled with dozens of representatives of accounting firms, banks and insurance companies.
But board members Marc Siegel and Thomas Linsmeier cast dissenting votes on the new guidance for how companies write-down assets that have dropped significantly in value.
The changes would take effect in the second quarter for most U.S. financial firms, but early adoption could be allowed for first quarter results.
GMG Price at posting:
38.6¢ Sentiment: Hold Disclosure: Held
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