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See What People Are Saying About... Relaxing Mark-To-Market Rules

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U.S. accounting standard-setters bowed to congressional pressure on Thursday and agreed to give banks more flexibility in the way they value toxic assets; in other words to change mark-to-market rules that have forced billions of dollars in writedowns.

The five-member Financial Accounting Standards Board voted unanimously for the new guidance on valuing assets, but split 3-2 in backing new guidance on how to write-down impaired assets.

The changes to mark-to-market accounting would take effect in the second quarter for most U.S. financial firms, but early adoption could be allowed for first quarter results.

Advocates of the changes argue that pricing assets to firesale prices during a time of inactive markets has exacerbated the financial crisis through the writedowns, big earnings hits, damage to capital ratios, and a reduced ability to lend.

However, opponents counter that more flexibility with the rules would let big banks hide the real value of their toxic assets.

And that leads to our Fast Money Reader Poll. Do you think relaxed mark-to-market standards will ultimately remedy the financial crisis?



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