Banks are likely to react to a new Financial Accounting Standards Board standard requiring them to mark most securities to market by shifting a portion of their holdings in fixed-rate mortgage-backed securities into shorter-term Treasury instruments or less risky government or agency securities, according to a study by Big 8 accounting firm Ernst & Young.

Moreover, a shift to market accounting by banks could make their earnings more volatile and have an immediate earnings impact, the study said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.