On April 2, the Financial Accounting Standards Board (FASB) is expected to vote on a proposal to relax an accounting standard at the heart of the financial crisis -- or at least the accounting of it.
Many big banks say the crisis has been made worse -- perhaps created -- by mark-to-market accounting rules, which require toxic assets to be carried on their books at fire-sale prices, based on recent trades of similar assets for far less than they would command in normal times. Those bankers prefer looser accounting rules allowing higher values calculated by in-house mathematical systems.
But not everyone agrees that mark-to-market rules have been as damaging as the banks claim.
"I've never bought the idea that market-value accounting caused this crisis," says Wharton accounting professor Brian J. Bushee. Changing accounting rules to accommodate the banks would be like changing the scoring system for tennis, he suggests.
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