The Financial Accounting Standards Board's accounting rules for credit risk have good intentions, but a likely amplification of the ups and downs of the credit market was probably not one of them.
Starting in 2010, regulators warned banks about the risks associated with rising interest rates. The problem has turned out to be just the opposite: persistently low rates.
Smaller institutions have added steadily to their holdings of securities that, while earning them a higher return, are more difficult to trade or liquidate.
The Federal Reserve has made clear that higher rates are more a question of when, not if, but banks should let go of rate hikes being anything like they were under Alan Greenspan.