Possible modification to mark-to-market rules related to bank write-downs of troubled assets

Tuesday, 31 March 2009 03:34

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Another upcoming rally in the financial stocks?

But the biggest news may come Thursday. The Financial Accounting Standards Board is expected to decide whether to modify mark-to-market rules related to bank write-downs of troubled assets.

Some observers say the mark-to-market rules forced banks to take massive write-downs — even on mortgage assets that holders were still consistently paying. Others say a change would be a setback for transparency.

If mark-to-market accounting is dropped, it could boost earnings at the troubled banks by 20% or more, some analysts say.

Those who stand to benefit from such a move — Citigroup, Bank of America and Wells Fargo — were huge losers Monday. They fell 12% to 18%, but volume was unexceptional.

Source: Leaders Dodge Pain, But NYSE Adds Distribution Day

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