4/1/2008: Charlie McCreevy on fair value/mark-to-market accounting

Excerpt from testimony of Charlie McCreevy, European Commissioner for Internal Market and Services, before European Parliament's Committee on Economic and Monetary Affairs on Latest developments on policy response to financial turmoil

There is a growing debate on whether fair value and mark to market measurements may have aggravated the crisis by bringing pro-cyclicality in financial statements. I want to make it clear that I believe that there are some real accounting issues and anomalies to examine, including the interface with the Capital Requirements Directive, such as the consolidation of special purpose entities or the measurement and information disclosed on risk exposures. Clearly, these and other issues – such as the impact of mark to market valuation when markets generally become illiquid and irrational – must be thoroughly analysed.