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SEC Official Says Report Will Show Fair Value Not Cause of Bank Failures
by BNA Daily Report for Executives (Subscription required for full article)
December 16, 2008
BNA's Denise Lugo reports that the SEC's deputy chief accountant, James Kroeker, said the agency's mandated study of fair value accounting will show that fair value has not been the cause of bank failures. Speaking at a meeting of the Financial Accounting Standards Board yesterday, Kroeker said that, "[f]or a vast majority of banks that failed, fair value was a very small piece of their accounting." For the largest banks that failed in particular, he said that "something like 85 plus percent of their assets are loans, almost all had no fair value assets in the trading category or a derivatives category." Regarding calls to suspend or change FAS 157, Kroeker said that, given what the SEC has "heard from investors and the usefulness of fair value you could pretty clearly read where we're likely to come out on that."
