Congress Seeks Fair-Value Acc'ting Suspension

Congress is calling on the Securities and Exchange Commission to suspend fair-value accounting on distressed assets as part of a $700 billion bill to restore financial stability. The Securities and Exchange Commission and the Financial Accounting Standards Board appear to be having second thoughts about Financial Accounting Standard 157, which governs writedowns on hard-to-value assets. And many in the financial services industry blame FAS 157 for the precipitous drop in the value of subprime mortgage securities that has crippled so many companies. The bill reminds the SEC that it has the authority to suspend FAS 157 if "it is in the public interest and protects investors." In addition, the bill directs the SEC, in consultation with the Federal Reserve Board and the Treasury Department, to conduct a study of FAS 157 and report back to Congress within 90 days.