Comments by Former Fed Chairman Paul Volcker on 3/13/2008 before the Advisory Committee on Auditing Profession (about 42:45 minutes into the webcast of the Morning Session )
It is known to some people around this room that I have a certain amount of problems with fair value accounting. It seems to me that this [i.e., fair value accounting] has been seized upon as a summum bonum [highest good] of accounting, of general field theory, that was going to solve all problems. But, I think it's evident that it doesn't solve all problems. In fact, it may create a few. In fact, [unintelligible] along the lines of some of our financial engineers, who keep running into 100 year possibilities every 2 years. There is a real question of how to blend the real insights of mark-to-market accounting in markets where there's no market. Or, in fact, the accounting practice may lead to exaggerated movements in markets, which is the opposite of what we want to happen. And I don't say there is any easy solution to this.
Other comments by Paul Volcker on fair value and mark-to-market accounting.
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