FASB Vote Relaxes Mark To Market Accounting Rule

The FASB, pressured by U.S. lawmakers, voted to relax fair-value mark to market accounting rules banks say don’t work when markets are inactive. The question is when does the FASB Mark to market rule apply.

FASB rule changes on mark to market take pressure off the banks on accounting for mortgage-backed assets. It gives firms more leeway in valuing assets.

The thing is that Bloomberg says fair value can be applied to Q1, AP on Yahoo finance says new rules apply to Q2. FASB site says nothing.

According to this Twit from Jim Cramer Citigroup Gets a Lease on Life From FASB: The change in mark-to-market might bring the short-squeeze of a lifetime.

Her is the summary of FASB's April 1 board meeting.

"Summary of Board decisions are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue a final standard."

FASB board made the following decisions.

The proposed disclosures would be updated to reflect the results of the Board’s redeliberations of FSP FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.

The scope of the proposed sensitivity analysis disclosures would be finalized as proposed and would not be expanded.

The Board previously decided to require specific disclosures for securitization and asset backed financing arrangements where a transferor has continuing involvement with transferred financial assets accounted for as sales. The Board decided to expand those requirements to all transfers of financial assets accounted for as sales where the transferor has continuing involvement with transferred financial assets.

All disclosure requirements would apply to both nonpublic and public entities.

An entity would disclose the nature of any beneficial interests received as proceeds from a sale of financial assets, and also disclose the inputs and valuation techniques used to value those beneficial interests.

An entity would disclose the maximum exposure to loss arising from its continuing involvement, except in the case of a secured borrowing.
Further guidance on how to consider materiality or significance in relation to continuing involvements would not be provided.

The reporting entity would not be required to disclose standardized categories of transferred financial assets in standardized tabular formats.

An entity would not be required to disclose an analysis of the maturity of its repurchase obligations.

An entity would not be required to disclose the amount of transfer activity (that qualifies for derecognition) in a reporting period when the transfer activity is not evenly distributed throughout the reporting period.

Based on the information provided by FASB


Source: huliq.com