Update: FASB modifies Mark to Market…

UPDATE: 9:33AM est: On the wires now here

The changes will allow the assets to be valued at what they would go for in an “orderly” sale, as opposed to a forced or distressed sale. The new guidelines will apply to the second quarter that began this month.

In a twist, though, the expanded leeway for financial institutions could undercut the government’s new financial rescue program in which it is joining with private investors to buy up about $500 billion in toxic assets from banks, some experts say.

The mark-to-market rules have forced banks to take steep write-downs on some assets, especially securities tied to high-risk subprime mortgages.

An estimated $2 trillion in soured assets is gumming up banks’ books. As the financial crisis has ground on, more banks have foundered and failed. That’s prompted the industry and lawmakers of both parties to push for the accounting relief and flexibility.

But some fear that companies will use the leeway to boost the value of the assets on their books to “unrealistic levels,” Robert Willens, an expert on tax and accounting issues for Wall Street clients, told The Associated Press last week.

We’re back!! Check out FASB news on the first vote on changes..

Breaking on CNBC right now,

FASB removes presumption that assets in inactive market are automatically distressed’

FASB: New mark to market guidance should be prospective not retroactive: new guidance effective for 2009 Second Quarter; Q1 application permitted

(this will help financials use cash flow instead of last price to mark assets in frozen markets, more votes from FASB coming forthwith!)

PS Were I Jamie Dimon, I would remark with these rules and I would NOT sell into the Geithner PPIP plan, I would wait for my assets to come back, which is what the banks have been doing already, sort of counter productive in some ways we shall see..

Financials  SOARING on the news, brushing off a bad weekly jobless claims number..

DJ futures up 118 and financials across the board higher…

April 2, 2009. Tags: FASB, Finance, mark to market, PPIP. Economy, Finance, Housing, Obama Administration, Politics, TARP, Wall St. 1 comment.