WASHINGTON (Reuters) - Top U.S. lawmakers said on Thursday that Congress would take action if accounting regulators and rulemakers failed to quickly improve the mark-to-market accounting standard that has forced banks to record billions of dollars in asset writedowns.
"If the regulators and standard setters do not act now to improve the standards, then the Congress will have no other option than to act itself," Paul Kanjorski, the chairman of the U.S. House of Representatives capital markets subcommittee, told a hearing he called to examine the accounting standard.
The Financial Accounting Standards Board is working on new guidance to help banks determine whether a market is active or inactive and whether a transaction is distressed.
Securities and Exchange Commission Chairman Mary Schapiro told Congress on Wednesday that she was pushing FASB to issue the guidance in the second quarter.
The accounting rule, which requires assets to be valued at current market prices, is defended by investor advocates but the banking industry has pleaded for a suspension or modification of the rule.
Spencer Bachus, the top Republican on the full Financial Services Committee, said FASB and the SEC have not taken meaningful action to address the negative effects of the accounting rule.
"Such action is long overdue," Bachus said at the hearing. "If FASB and the SEC refuse to use their authority to provide useful and timely guidance, this Congress may have no choice but to act in their place."
FASB was created to be an independent body and sheltered from political whims. However, lawmakers have been pressuring the accounting standard setter and the SEC, which enforces accounting rules, to provide banks with some relief.
Barney Frank, the influential chairman of the full House Financial Services Committee, told FASB and SEC officials at the hearing: "We're going to have to have some movement."
(Reporting by Rachelle Younglai, Karey Wutkowski; Editing by Tim Dobbyn)
