Despite mounting pressure from banks and other corporations, the Financial Accounting Standards Board is unlikely to retreat from a controversial derivatives proposal. Senior executives from 22 major companies wrote to the rulemaking body last week urging it to slow down the new rules. The plan-proposed in June 1996 after years in the works-would require companies to record derivatives at fair market value on quarterly income statements. But the FASB's top official was not moved by the plea. "There is really nothing new in the letter we received," FASB chairman Edward L. Jenkins said in an interview Friday. "This project has been under way for four or five years, and it is important to the capital markets and investors to have more transparency and understanding about derivatives." In the July 31 letter to Mr. Jenkins and Securities and Exchange Commission Chairman Arthur Levitt Jr., both buyers and sellers of derivatives said the regulators are rushing without adequately considering the rule's effects, especially on risk management. "We urge FASB to expose its new proposal for public comment," reads the letter, signed in part by the chief executive officers of Chase Manhattan Corp., Goldman Sachs & Co., and American International Group Inc. "Costly and complex" new derivatives accounting rules would be tackled at the same time companies are dealing with year-2000 computer problems and the convergence of currencies in Europe, the executives also noted. While bankers did not want to talk on the record Friday about prospects for change, privately they were pessimistic. "Nobody fully understands how this will work, but the folks at FASB just want to get it off their desks," said a senior executive at a money-center bank. The rule was prompted by high-profile losses at companies such as Procter & Gamble Co. But bankers claim the rule would distort earnings because derivatives contracts change value as the price of underlying assets fluctuate. Beyond Mr. Jenkins, the plan has another potent ally in Mr. Levitt. The SEC chief has insisted investors will be better able to judge the potential impact of derivatives once the rule takes effect. SEC Chief Accountant Michael Sutton issued a statement Friday calling the rule "reasonable" and noting, "It is time to bring this process to a conclusion." The FASB has already made several concessions to soften the proposal. For example, the board last month voted to give favorable bookkeeping treatment to companies that use derivatives as insurance against losses. In addition, Mr. Jenkins said that the FASB is still accepting input on the plan. Still, the FASB will have a final standard in place by yearend, he said. The effective date is likely to be Jan. 1, 1999. "We felt it was important to stick to that date," Mr. Jenkins said. Last week's letter also was signed by the chief financial officers of Times Mirror Corp., Hershey Foods Corp., and Wellman Inc. other banks represented on the letter include Citicorp, NationsBank Corp., J.P. Morgan & Co., and Bankers Trust New York Corp.

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