SEC's Schapiro: 'Mark To Market' Changes May Be Coming

New SEC chairwoman Mary Schapiro said this morning that companies whose balance sheets are burdened with toxic assets they cannot sell may get some relief, as relaxations in the "mark to market" accounting rules are being considered.

Schapiro said that the Financial Accounting Standards Board (FASB) is "actively considering changes" to its mark to market rules, giving companies some "interpretive guidance," CNBC reported.

Under mark to market accounting, businesses must value assets on their books to the price they would fetch if they had to sold today. For banks carrying toxic assets, such as mortgage-backed securities, that no one will buy, mark to market is killing them. These assets have no value because there is no market for them -- no one wants to buy them. Presumably, if the economy rebounds, these assets will have value again. But that doesn't help businesses today.

Advocates for keeping mark to market say that if it were abolished, balance sheets would become pure fiction.

Schapiro warned, however, that any changes would be "around the margins," signaling that mark to market won't be thrown out altogether, as many businesses would like.

-- Frank Ahrens