Wednesday, August 31, 2011

Officials Warn Lenders On Greek-Debt Values

Wall Street Journal
August 31, 2011

In an unusual move, international accounting rule makers said some European banks haven't taken big-enough write-downs on the value of the distressed Greek government debt they hold.

Some banks are using their own models to value their Greek bonds and other distressed sovereign debt when accounting rules dictate that they should be using market prices to determine the securities' fair value, the International Accounting Standards Board said in a letter this month to the European Union's chief securities regulator.

In some cases, using the "mark to model" approach, as opposed to "mark to market," may have helped some banks to dodge potentially painful losses in recent midyear financial reports.


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