The banking industry has won a victory in the fair value war, sort of. The Financial Accounting Standards Board last week turned aside a staff recommendation to “require interim and annual disclosures for all financial instruments” covered by FASB Statement 107—“debt securities classified as available-for-sale, debt securities classified as held-to-maturity, an loans and long-term receivables except those measure at fair value with changes in fair value recognized through earnings.”
So the FASB is going to come up with a new recommendation, one designed to address banking industry concerns. The American Bankers Association expressed concern that institutions would be unable to meet the dramatic shift in a timely manner. The FASB will now issue a draft recommendation to step up footnote disclosures for these instruments to a quarterly from an annual basis.