NORWALK, Conn. – NCUA and the banking regulators told the Financial Accounting Standards Board Friday they support proposed changes to mark-to-market accounting rules that would allow entities to separate expected losses from market-value losses on their financial reports, but only for the just completed quarter and not retroactively, as many credit unions are requesting.
"We view the proposed accounting and reporting changes as timely and encourage the FASB to promptly issue final guidance that will be effective for the first quarter 2009 reporting," said the regulators in a joint comment letter submitted to the accounting rules-setters.
The letter was signed by Melinda Love, NCUA’s new chief examiner, along with representatives of the FDIC, Federal Reserve, Comptroller of the Currency and Office of Thrift Supervision.
The FASB, which sets the rules for generally accepted accounting principles, or GAAP, is expected to issue the new guidance on Thursday, which will allow credit unions and other entities to take charges for other-than-temporary impaired instruments and report them through the income statement, while separating out the continuing diminishment of market value for a broad range of those instruments, especially mortgage-backed securities.
The credit unions community is also supporting the proposed change but is also asking the FASB to allow credit unions to use the new guidance for their financial reports retroactively, dating back to 2008.
The regulators also encouraged the FASB to speed up other proposals aimed at easing mark-to-market accounting, including allowing an entity to reverse OTTI charges on certain securities when evidence exists that an impairment has been reversed.
