Overreliance on markets and models led the SEC and its sidekick FASB to put into place the highly procyclical and ultimately very destructive market-to-market accounting system, despite strong warnings from the secretary of the Treasury, the chairman of the Fed and the chairman of FDIC that it would create greater volatility in banking and lead to severe credit crunches.
No wonder, too, that high-tech companies and venture capitalists are fighting the FASB tooth and nail.
It is an angry book because Bill Isaac is by no means pleased with the string of policy blunders (mark-to-market accounting, pro-cyclical regulatory regimes from FASB and the SEC, the repeal of Glass-Steagall, etc.) that led to a global financial meltdown in the fall of 2008.
Our financial accounting professor had written FASB standards and our Macro professor (we had that class as the meltdown occurred) was having conversations with Ben Bernanke and recommending policy.
In the meantime, the Financial Accounting Standards Board (FASB) clarified the rules and gave banks, in particular, a potential defense.
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Unfortunately, investors can also expect a tidal wave of accounting minutiae from the regulators, as the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) get on the stick.
In the name of "fairness, " preventing future Enrons, and increased oversight, Congress, the SEC and the Financial Accounting Standards Board (FASB) have piled burdens onto the economy that put entrepreneurship at risk.
Which is why the Financial Accounting Standards Board (FASB) should hold its horses and pull back from enacting a rule that would require publicly traded companies to expense stock options.
But FASB's biggest crime against the economy and the American people came when it decided to measure the impossible: options expensing.
The IASB's position has been weakened by differences with the Financial Accounting Standards Board (FASB), which sets rules in America and which wants to merge eventually with the IASB (although a recent survey found only 24% of American finance executives supported this goal).
The FASB has yet to produce proposals on financial assets and is more wedded to a fair-value regime.
Apparently stung from having been pressured by Congress (how dare they?) and probably embarrassed over their defeat within the professional accounting community, FASB decided to double down a few months ago.
FASB's controlling board of trustees comes from industry groups and its funds from audit firms, industry and financial groups.
Or take the FASB's Statement 2, which requires companies to deduct research and development expenditures from income in the period in which they are made.
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