The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

ABA Commends FASB on Progress But Says More Needs to be Done on OTTI

Following a barrage of criticism from market participants, government figures and regulators alike, the Financial Accounting Standards Board (FASB) has finally released a number of proposals concerning mark to market accounting rules. The proposals include allowing firms more leeway in determining if a market is active and whether a transaction is distressed. However, a number of bodies have already criticised the proposals, including the American Bankers Association (ABA), which says more guidance is needed, especially in the area of other than temporary impairment (OTTI).

While we are encouraged by today’s action, we believe that the proposal does not adequately address problems with OTTI, which is critically important and has been extremely controversial for many years. Specifically, losses recorded in capital should be based on economic losses rather than market losses,” the association said in a statement.

The association believes that problems with mark to market accounting have needlessly exacerbated the current economic crisis and resulted in the loss of billions of dollars in capital and therefore FASB needs to do as much as it can to improve matters.

“ABA has called for improved mark to market accounting guidance in time for companies to use it when preparing their first quarter financial reports, and we are pleased that FASB is acting a timely fashion. While we welcome today’s news, it will be important to look at the details of the written proposal to see how fully it improves the guidance. It will also be imperative to examine the practical effect the proposal will have based on the various ways it is interpreted,” the statement concludes.

ABA issued a similar statement last month, with a view to prompting further action by the FASB, but it seems that the accounting trade body has yet again failed to satisfactorily deal with the issues raised.

Related content

WEBINAR

Upcoming Webinar: Brexit: Reviewing the regulatory landscape and the data management response

Date: 11 May 2021 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes With Brexit behind us and the UK establishing its own regulatory regime having failed to reach equivalence with the EU, financial firms face challenges of double reporting, uncertainty about UK regulation, and a potential exodus of top talent. The...

BLOG

Deadlines and Data Management By-Products of LIBOR Transition

The Financial Stability Board (FSB) has published a global transition roadmap for LIBOR that sets out a timetable of actions financial firms should take to ensure a smooth transition from LIBOR to other risk-free rates by the end of 2021. The data management task of transition remains a huge challenge for many firms, but it...

EVENT

RegTech Summit New York City

Now in its 5th year, the RegTech Summit in NYC explores how the North American financial services industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

FRTB Special Report

FRTB is one of the most sweeping and transformative pieces of regulation to hit the financial markets in the last two decades. With the deadline confirmed as January 2022, this Special Report provides a detailed insight into exactly what the data requirements are for FRTB in its latest (and final) incarnation, and explores what needs to be done in order to meet these needs on a cost-effective and company-wide basis.