Bankers said the Securities and Exchange Commission's decision this week to relax fair-value accounting rules is a good start, but some said it does not provide enough clarity on how to value distressed securities with no functioning market.

On Tuesday, the regulator issued what it described as a "clarification" of fair-value accounting rules, a move designed to create flexibility for financial companies looking to write down the value of securities in times, such as these, when there is no viable market for those assets. The alteration lets companies use internal models rather than a mandatory mark to market if a fire sale occurs.

However, the lack of a market for these assets remains the biggest problem, bankers said.

Thomas E. Panther, the controller at the $177 billion-asset SunTrust Banks Inc. in Atlanta, said in a statement that the SEC's move was "a step in the right direction." However, he added, "It does not address the contradiction of requiring management estimates to be based on a market participant's current return expectations."

Joseph R. Ficalora, the chairman and chief executive of the $31.1 billion-asset New York Community Bancorp Inc. in Westbury, agreed. "Every company that has failed this year wouldn't have failed if we used the accounting we had three years ago," he said in an interview.

Donna J. Fisher, a senior vice president of tax and accounting at the American Bankers Association, also questioned how accountants at individual companies would process the latest changes. She suggested guidance on an industry standard before banks begin reporting earnings this month. "Will the firms view this the same way the industry does? If not, we're back in the soup," she said. However, Ms. Fisher and others cited several positives in the change. They cited support for a determination that companies are not required to use nonbinding broker quotes and that cash-flow estimates are suitable for determining asset values in cases where there are no market participants.

Though companies have used fair-value accounting for years, unanswered questions have lingered about how to value certain securities, particularly when markets first seized up last year. (Some squarely blame the practice of fair-value accounting for the implosion of markets for structured products and a subsequent strain on capital.)

For instance, the association between fair value and market value begins to deteriorate with so-called Level 2 securities, which are not quoted directly or traded actively but have "observable inputs" — such as market prices of similar securities — that can be thrown into models. The SEC on Tuesday clarified that a "good" Level 3 asset — those that trade so infrequently as to establish virtually no reliable market price and are valued using internal modeling — may be better than a bad Level 2 asset, which relies on broker quotes, a point that also pleased the bankers association.

Tommy Prescott, the chief financial officer at the $34.2 billion-asset Synovus Financial Corp. in Columbus, Ga., described the clarifications as "useful," particularly because they affirm that distress sales are not determinative of fair value. "This issue is most relevant to us in the determination of fair value of real estate securing impaired loans, as well as foreclosed real estate," he said in a statement. Synovus already applies fair value, he said.

Meanwhile, there is hope for more clarification. The Financial Accounting Standards Board met Tuesday and is expected to elaborate on the SEC's decision. The industry would then have a week to comment, something the ABA is encouraging. "We've told bankers, 'Even if you haven't seen it, go ahead and write in with your concerns,' " Ms. Fisher said.

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