Suspending regulatory capital requirements is more viable than adjusting mark-to-market accounting rules and therefore a better way of approaching the ongoing financial crisis, said James Chanos, Kynikos Associates president & founder.
“It’s much easier to do that globally than to tinker with everybody’s books,” he said.
If accounting rules are altered, said Chanos, investors will pay a lower multiple on reported earnings. Accurate data is also essential in restoring investor confidence in the markets, he said.
“Don’t water down corporate accounting,” he said. “Accounting is destiny. And companies, like people don’t often change their spots.”