Competitive Disadvantage and Mark-to-Market Accounting

The Securities & Exchange Commission (SEC) recently sent a message to the Financial Accounting Foundation that the standards of the Financial Accounting Standards Board (FASB) should not undercut the competitive position of US companies or US capital markets. The SEC's position continues to be that a more accurate statement of financial position can be achieved at little or no cost by marking to market debt securities that are held as investments. It wants to eliminate from the income statement the benefit of gains-trading, that is, selling profitable and holding losing positions. The FASB has yet to decide whether to undertake a limited-scope recognition project. Marking to market debt securities held as assets for some financial institutions would be an improvement, albeit a small one.