The American Bankers Association has published a white paper raising concerns and urging caution over the process being taken by Connecticut’s Financial Accounting Standards Board (FASB) and other regulators on projects relating to financial instruments, specifically mark-to-market accounting.

In the white paper, the ABA takes aim at recent proposals that call for an expansion of mark-to-market accounting in financial statements. According to the ABA, bankers have long supported mark-to-market accounting for assets that are actively traded, but have opposed it for most of the traditional loans that banks make.

"Given the role that mark-to-market has played in exacerbating the current economic crisis, it is hard to understand the rationale for expanding it at this time," said Donna Fisher, ABA’s senior vice president of tax, accounting and financial management. "Mark-to-market accounting lacks a sufficient level of reliability, which the current market has demonstrated."

ABA expressed concern that the standard setting process is being compromised, partly because the International Accounting Standards Board (FASB’s international sister organization) timeline for completion may not allow U.S. companies to have a chance for appropriate due process in providing input.

"If the IASB finalizes its rule on accounting for loans and debt securities prior to the FASB finalizing its rule, FASB will have to adopt the IASB’s rules or adopt a different rule which would result in divergence between U.S. GAAP and international rules," the white paper stated. "The goal should be improving the current accounting rules that are in need of repair within a time frame that provides for due process and strives for international convergence."