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Accounts change 'no big deal'

CHANGES to fair-value accounting rules in the United States may not be a big deal, one analyst said yesterday.

On Thursday, the Financial Accounting Standards Board voted to allow banks to record certain securities on their balance sheets at market value, but not necessarily their value in a fire sale. In other words, if one bank has sold assets at bargain basement prices to get them off its balance sheets, its competitors do not have to mark similar assets down to those levels.

But banks must still account for current market prices and cannot mark assets at values they might fetch in different market conditions, said Jennifer Thompson of research firm Portales Partners.

Auditors may believe they have more flexibility to determine fair value for trading assets, but that is not likely to translate to banks recording big gains, she said.


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