4/10/2008: Bernanke on mark-to-market accounting

Excerpts from Bernanke: mark-to-market accounting challenging
Reuters story on question-and-answer session after Ben Bernanke's Richmond speech

Federal Reserve Chairman Ben Bernanke said on Thursday mark-to-market accounting has helped to destabilize markets for illiquid assets, but regulators need to be careful about any changes to the system.

"It's also true in the current context, that mark-to-market accounting has been sometimes destabilizing in that sales of assets into very illiquid markets had led to reductions in prices, which have caused writedowns which have sometimes caused firesales, and you get into an adverse dynamic which has caused problems in some of our markets," Bernanke said in a question-and-answer session before a business group,

On balance, he said mark-to-market accounting has been a positive influence for investors, but valuations should be determined during normally functioning, stable markets, not times when assets are illiquid.