We must not allow bankers, their lobbyists, or their accountants to lull us into a false sense of security again (Accountants Misled Us Into Crisis, New York Times, September 11, 2009: B1, B4).
First of all, all 'off the books' liabilities should be banned. We need to know the true state of a company's assets and liabilities. Second we should not be seduced by pleas that some assets should be priced at their expected value rather than at market price because "the bank does not intend to sell them." The bank's intentions are irrelevant, what the investor needs to know is what those investments would fetch in the market if there were a sudden calling in of debts -- something that happened just last year.
The FASB should stand firm, the politicians should push back against the lobbyists who are trying to prevent reform. It is after all in the best interests of the banks that they have sufficient reserves against all their debts as I do not think any government will dare to bail them out ever again after they have flaunted their arrogant bonuses in the faces of the people.
Sent to New York Times