EU calls for matching US accounting change
European Union finance ministers said Saturday that matching US accounting rules, which allow US banks discretion over pricing their impaired mortgage assets, bore "critical importance" so European banks are not operating at a disadvantage, dpa reported.
The ministers, meeting informally in Prague, called on the continent's setter of accounting rules, the International Accounting Standards Board, "to cooperate closely" with its US counterpart "with the aim of achieving equivalent treatment...in order to avoid risks of competitive distortions."
Under pressure from US Congress, the US-based Financial Accounting Standards Board allowed US banks on Thursday to write off their toxic mortgage assets at higher than current market prices.
The value of bank mortgage holdings has been decimated by an unprecedented housing downturn that prompted millions of Americans to foreclose on their homes.
The FASB changes, pushed by banks and US legislators, relax so-called "mark-to-market" accounting rules, giving banks greater discretion to decide the price of their "distressed" assets when they report quarterly earnings.