FOR IMMEDIATE RELEASE
ICBA Supports Proposed Accounting Changes
Washington, D.C. (April 1, 2009)—The Independent Community Bankers of America (ICBA) today voiced strong support for Financial Accounting Standards Board (FASB) proposals that would make other-than-temporary-impairment (OTTI) guidance more operational and provide additional guidance for fair value measurements. ICBA is urging FASB not to delay action on the proposals, particularly the OTTI issue because current guidance does not foster a transparent view of community bank investments and true financial conditions.
In its comment letter to FASB, ICBA voiced strong support for a proposal that would separate OTTIs on debt and equity securities into two components, one for credit losses and one for other losses. Only the credit loss portion would go through earnings. Current guidance has resulted in an overstatement of losses that have not or may not occur, using capital that could otherwise support further lending.
ICBA agreed that the effective date should be for periods after March 15, 2009 and strongly urged FASB to allow restatements or an opportunity to “true-up” OTTIs recorded in prior periods to enable users to more easily compare statements for different periods.
ICBA urged FASB not to delay action on these guidance changes that would improve financial statement transparency.
“ICBA supports these proposals because they would improve transparency in community banks’ financial statements and we have provided recommendations to further improve guidance,” said Karen Thomas, ICBA executive vice president of government relations. “Community banks support better OTTI guidance both as preparers and users of financial statements.”
FASB will vote on the proposed changes tomorrow.To read ICBA’s comment letter, visit www.icba.org.