“This letter (SEC document) could be titled, pick a number, any number, as it gives bankers great leeway in choosing what numbers they will give to investors,” said Lynn Turner, who served as chief accountant at the SEC from 1998 through 2001. – quote found in the original article on Reuters excerpted below:

SEC gives banks more leeway on mark-to-market

By John Poirier and Emily Chasan

WASHINGTON (Reuters) – U.S. securities regulators on Tuesday gave the financial industry a reprieve from marking hard-to-value assets down to fire sale prices.

U.S. accounting rule maker, the Financial Accounting Standards Board said on its Web site on Tuesday that it would change the agenda for its Wednesday meeting to focus on fair value accounting.

“This is a significant first step and adds stability, confidence, and liquidity within the capital markets,” said Steve Bartlett, president and chief executive of The Financial Services Roundtable. “By clarifying how to treat assets in an uncertain market, the SEC is continuing to provide transparency to investors and helping institutions to provide credit in periods of market stress.”

In the new guidance, first reported by Reuters, the U.S. Securities and Exchange Commission.

MARK-TO-ESTIMATE

The SEC’s guidance on Tuesday, came on the last day of the third quarter for most U.S. companies, allowing them to incorporate the changes in their next round of financial statements.

In a document on the matter, the SEC reaffirmed that management’s internal assumptions can be used to measure fair value when relevant market evidence does not exist.

[ . . . ]

“This guidance will help auditors more accurately price assets that are difficult to value under current market conditions,” said Edward Yingling, president and chief executive of the American Bankers Association, whose group has been among several pressuring the SEC to clarify the rules for months.

But fair value accounting has been popular with many investors who said it greatly increased transparency about the risks banks are facing.

Tue Sep 30, 2008 9:49pm EDT

[ . . .] – (from page 3 of same article:) -

Under U.S. accounting rules, a “Level 1″ asset can be marked-to-market based on a simple price quote in an active market. However, the price of a “Level 2″ asset is “mark-to-model” and is estimated based on observable market prices and inputs. A “Level 3″ asset is so illiquid that its value is based entirely on management’s best estimate derived from complex mathematical models.

In a letter to SEC Chairman Christopher Cox on Tuesday a bipartisan group of more than 60 U.S. lawmakers urged the SEC to suspend the fair value accounting rule immediately.

(Reporting by John Poirier, Emily Chasan, and Rachelle Younglai with additional reporting by Jennifer Ablan; editing by Carol Bishopric)

http://www.reuters.com/article/newsOne/idUSWAT01020020081001

***

My Note – the letter of persuasion covered US 60 lawmakers out of how many? Were all of them US Congress level lawmakers or state lawmakers or did they get the dog catcher to sign it too? How many were backed by the banking industry, chamber of commerce magic lobby, investment banking and similar friends? – Yeah, pick a number and just say its worth that much – Right.

Isn’t that the kind of accounting and the manner of thinking that brought us this mess?

- comments by cricketdiane, 10-01-08