Federal reserve chairman comes to the defence of controversial accounting method
Federal Reserve chairman Ben Bernanke has leapt to the defence of fair value over claims it has exacerbated the credit crunch.
Bernanke said that suspending the controversial valuation method would further erode investor confidence, Reuters reported.
Some banks have been critical of the rules, as the market for many of their defaulting sub-prime derivatives has dried up. The lack of a market meant it was impossible to mark their value to the market, and led to huge writedowns. But alternatives, such as the price when holding such assets to maturity, are also bad, Bernanke said.
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