FASB Plan Is ‘Destructive Idea’ for Banks, Ex-FDIC Chief
“May 28 (Bloomberg) — A U.S. accounting board’s proposal that would require banks to report the fair value of loans on their books is a “destructive idea” that will lead to reduced lending, a former chairman of the Federal Deposit Insurance Corp. said.
“This is a terribly destructive idea to even propose,” William Isaac said in a telephone interview today. Just by making the proposal, the Financial Accounting Standards Board will lead banks to quit making loans without an easily discernable market value, and keep the ones they do make to shorter maturities, Isaac said.
The FASB proposal comes “in the face of worldwide condemnation,” Isaac said.”
Hey, if you can’t see the real value it can’t hurt . Right?
In slightly related news read below.
“May 28 (Bloomberg) — New home sales in Phoenix and Las Vegas, two U.S. markets hardest hit by foreclosures, are set to plunge as a federal tax credit for homebuying expires, according to data from real estate researcher Metrostudy.
A sample of subdivisions in both cities showed sales contracts for new homes “pulled back sharply in May and contract cancellations spiked,” Houston-based Metrostudy said in an e-mail. Would-be buyers canceled about 40 percent of new home contracts in San Diego in May, up from 10 percent in April, the company said. Data on new signings in that city weren’t immediately available.
Sales indicators fell after April 30, the last day for homebuyers to sign contracts in time for a federal tax credit of as much as $8,000 for first-time purchases and $6,500 for certain “move-up” buyers.”