The first step in the reform of U.S. "fair value" accounting standards was just passed by the Financial Accounting Standards Board. This step eases requirements that banks to value illiquid assets at current prices, allowing them to reduce their losses on paper. Instead, banks will be able to use things like expected cash flows to calcuate the value of the so-called toxic securities.
The five-member accounting board is meeting at its headquarters in Norwalk, Connecticut. The board will vote on further changes later this morning.
There's a lot of confusion about what these changes will mean for banks. Here's what they won't do: affect investor or analyst views of bank solvency.
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