The Risk Management Association said it is establishing a working group on fair-value accounting that will offer "solutions for the accounting profession."
Kevin Blakely, the trade group's chief executive, wrote in a letter Friday to its large-bank members that the accounting process has played "no small part" in the market's inability to find a price floor for the assets at the center of the subprime mortgage crisis — which so far has resulted in over $150 billion of writedowns.
"The accounting profession's determination to pursue [mark-to-market] valuation in the absence of liquid markets needs to be reconsidered," Mr. Blakely wrote. "Financial institutions are taking unwarranted losses of staggering proportions as a result of the accountants' position."
The Securities and Exchange Commission is working on providing additional information to companies on disclosures related to fair-value accounting, but neither it nor the Financial Accounting Standards Board has indicated any interest in revisiting the fundamental model.
"Should your institution share the concern regarding MTM, you may wish to join us in raising attention to this important systemic issue," Mr. Blakely wrote.
