Shooting the messenger

17 November 2009 By Martin Hutchinson

A US congressman wants bank regulators in charge of accounting standards. That suits those bankers who blame marktomarket accounting for the 2008 meltdown. But accounting merely exposed mistakes banks had made. Investors need independent standards, not regulatory coverups.

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Ed Perlmutter, a Democratic US congressman, has introduced an amendment to the proposed Financial Stability Improvement Act of 2009 that would grant the Council of Bank Regulators the power to order the Securities and Exchange Commission to suspend, modify or eliminate any accounting principles, standards or procedures that might impact the stability of the financial system or the soundness of financial companies. A House Financial Services Committee vote on the FSIA is expected on November 18.

Paul Volcker, a former chairman of the US Federal Reserve, told the New York Times Perlmutter's proposal was a terrible idea, saying it would eliminate the independence of the accounting rulesetting procedure.

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