04/24/2009 05:12 am ET Updated May 25, 2011

Geithner Calls For Balance On Mark-To-Market Accounting Rule Reform

Treasure Secretary Timothy Geithner said Tuesday that federal regulators who are examining reforms to mark-to-market accounting rules are working on a "constructive set of changes."

At a recent congressional hearing, lawmakers called on regulators to revise the rules, which require banks to value assets at current prices. Banks have resisted such revisions, because reducing the value of assets on their books leads to significant write-downs. Banks who suffer too many write-downs become insolvent.

Geithner told the Financial Services Committee that any reform of the accounting rule must strike a balance "between preserving confidence in the quality of public disclosure, which is very important to getting through this, [and addressing] some of the complications of applying those standards in a market like we're experiencing today."

Robert Herz, head of the Financial Accounting Standards Board, told a panel of lawmakers earlier this month that the loudest critics of fair market accounting practices have been the very same banks that have gone belly up when regulators would not let them adjust their accounting.

"I will tell you that I get calls and visits from some of those institutions that are now in government hands, about two weeks before they get taken over, trying to get the accounting changed," he said.