How to Hurt Our Capital Markets

The Financial Accounting Standards Board (FASB) is governed by the SEC, and it is the independent and definitive body that sets standards for financial reporting and investor protection. Largely populated by auditors and lawyers, some of their pronouncements were overly arcane and difficult to implement for the small company CFO. However the pronouncments were always conservative in nature and aimed at investor protection. We have a good system that is widely respected by domestic and foreign investors.

Now, there is a proposal to vitiate the FASB and transfer its duties to the yet unnamed and yet to be constituted, "systemic risk regulator." The sad thing is that the hare-brained proposal has the support of the American Bankers Association, mother hen of the folks who got us into the current mess. Of course, the ABA doesn't want to face up to the realities of marking its members' assets to market with the resultant hit to earnings and implications for capital ratios. Former SEC Commissioners, like Harvey Pitt, who has always been visonary, practical and sensible, are against it. Were this proposal to be accepted, it would be a blow to the integrity of our capital markets, just when they need to be reinforced and not called further into question.