“ICBA is disappointed that the SEC’s report did not conclude that a suspension of SFAS 157 and mark-to-market accounting is in order. ICBA has long held the view that mark-to-market or fair value accounting does not reflect the reality of community banking, a business based on the creation and holding of illiquid assets, where cash flow is generally a better measure of value for financial instruments.
“ICBA supports the report’s recommendations to reconsider accounting for impairments, including the current restrictions on the ability to record increases in value when market prices recover and the development of additional guidance for determining the fair value of investments in inactive markets where market prices are not readily available.
“The SEC report recommends improvements to the accounting guidance. ICBA had told the agency that more needs to be done to ensure a proper understanding of what fair value is and is not, and to ensure that it is being properly applied so that there is less likelihood for different interpretations among statement preparers, auditing firms, analysts, examiners and ultimately the markets.”