FASB augments FSP on mark-to-market accounting; banking group objects

By Cydney Posner

On Friday, FASB issued a new staff position clarifying the application of mark-to-market accounting in a market that is not active. The guidance in the FSP is consistent with and amplifies the guidance contained in earlier guidance. First, the FSP confirms that it applies only to financial assets and adds a new example to FAS 157. Interestingly, as discussed in a New York Times article today, some groups are still not happy with the guidance. The American Bankers Association (undoubtedly, a popular group in the heartland these days) has asked the SEC to override the FSP because, among other things, the guidance was too complex, " 'circular' and refused 'to recognize the realities of the current situation' by requiring companies to still evaluate liquidity risk in their calculations."

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