For an insight into the kind of lobbying that took place before the US Financial Accounting Standards Board agreed to ease mark-to-market rules, we direct you to this 2,180-word Wall Street Journal story (H/T Felix Salmon). http://blogs.reuters.com/felix-salm...atory-sausage-is-made-mark-to-market-edition/ The whole thing is a rather unsettling peek into the push and pull mechanics that exist between legislation-making and the banking industry. For instance, in it weâre told that financial firms grouped together to lobby legislators and the Board, or FASB, collectively spending $27.6m to lobby on the issue. They also donated some $286,000 to legislators on a key committee, many of whom pushed for the rule change, according to the WSJ. That was a smart move by the banks â at least from a short-term perspective. Wells Fargo, for instance, said the rule change increased its capital by $4.4bn in the first quarter, according to the paper. An estimate by accounting analyst Robert Willens in the Journal story, says the change will increase bank earnings in the second quarter by an average of 7 per cent. Spending a paltry £28m on lobbying and donations for a much larger financial benefit must seem a good deal. But it does raise questions about the independence of the FASB and associated legislators â a fact that didnât escape certain Board members. From the Journal piece: Still, many saw the new rules as a watering down of standards. That triggered a backlash within FASB. At a meeting of a FASB advisory group in New York on April 28, three of its members threatened to resign in protest, concerned that FASB had jeopardized its credibility. http://ftalphaville.ft.com/blog/2009/06/04/56636/marketing-mark-to-market-changes-to-the-fasb/ Rule changing in the US is really a cheap matter....
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