Volume 17, No. 13

 

Fair Value: What Will The SEC Say?:  The full effects of the Emergency Economic Stabilization Act of 2008 won’t be known for years. No other piece of legislation has ever had such an impact on the relationship between business and government - or between capital and ownership of capital. The line between shareholders and state has become quite blurry.

It might have an impact on the way that companies report their results to shareholders, too - and it won’t take years to find out. The EESA charged the SEC with conducting a study on "market-to-market accounting standards as provided in Statement Number 157 of the Financial Accounting Standards Board, as such standards are applicable to financial institutions, including depository institutions." The singling-out of the oft-demonized "Statement Number 157" gives hope to the banking lobby seeking to overturn fair value reporting.

Will the SEC act in the interests of shareholders and avoid any "reform" of fair value reporting? Or will it cave in to the demands of bankers who couldn’t resist their primal lending and investing urges? Politics is never a sure thing - but it’s possible to take a close look at the SEC’s responsibility under the Act and see what facts they might find as they execute their duty. How they will interpret those facts - and then act upon them - is very much an open question until January 2, when the SEC report of its findings and determinations is required to be submitted to Congress.

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