The new Financial Stability Oversight Council, formed under the Dodd-Frank Wall Street Reform and Consumer Protection Act, is empowered to review and comment to the Securities and Exchange Commission on “any existing or proposed accounting principle, standard, or procedure.” On Aug. 5, ABA formally asked Treasury Secretary Timothy Geithner for an Oversight Council review of the Financial Accounting Standards Board’s mark-to-market accounting proposal.

“For banking institutions, whose primary assets and liabilities are financial instruments, such accounting could dramatically change banking products and services as well as change how banking institutions are viewed by shareholders, depositors, and regulators,” wrote ABA President and CEO Edward Yingling.

In the letter Yingling spoke of ABA’s concern that banking financial statements would become harder to understand, “due to the focus on estimates of the market’s perception of value rather than the cash value to the bank.”

ABA also expressed concerns that mark-to-market accounting will be procyclical—that is, prone to making downturns worse. Many observers feel that accounting and related issues accelerated and exacerbated the impact of the financial crisis on many banks.

ABA has also met with regulators on this issue.

Help from ABA on fair-value commenting

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