Accounting changes to increase volatility of bank stocks

Have the bean-counters thought through the consequences of proposed changes to accounting standards?

The Asian Wall Street Journal of October 12th carried an article buried in the inside pages about certain changes in accounting rules which could have significant impact on how banking is done. If these changes go through, banks stocks could be as volatile as technology stocks. They could also give a huge fillip to the trading of secondary market in loans.

It appears that the Financial Accounting Standards Board FASB and the International Accounting Standards Committee would require banks to mark to market their entire loan portfolio. Traditionally banks tend to carry their loan portfolio at cost, except under special circumstances such as their loan trading book, or for some banks where they have...

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