New FASB Fair Value Guidelines for Financial Instruments

Implementing Mark-to-Market Revisions for Asset Valuation and Non-Temporary Impairments

FASB's April 2 action significantly impacts valuation of mortgage-backed securities

Recording of a 100-minute CPE/CLE webinar with Q&A


Conducted on Thursday, May 14, 2009

Program Materials

This seminar will analyze the new FASB mark-to-market guidance for accounting advisors to banking, financial services and other industries, offer a framework to make sound valuation decisions under the new rules, and discuss the impact of the new rules.

Description

Whether or not FASB yielded to practical reality or political pressure when it voted April 2 to relax the fair value accounting rules, many American industries (particularly stressed banking and financial services firms) and their accounting advisors will enjoy considerable new flexibility.

Under FSP 157-e, banks and other companies are allowed greater judgment on fair value of investments and in writing down losses on depressed mortgage-backed securities and other instruments. Other new FASB positions give new flexibility on valuing "other than temporary impairments" in securities.

Taken together, the FASB positions offer relief to struggling balance sheets but also mandate new or more frequent disclosures on investment valuations or valuation techniques. Accounting advisors and corporate clients must be well versed with the new rules by their effective date of June 15, 2009.

Listen as our panel of veteran valuation experts and banking attorneys explains the technical meaning of FASB's new mark-to-market guidance, suggests alternatives for making sound fair value decisions within the new rules, and analyzes the impact of this new guidance on current bank bailout plans.

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Outline

  1. Political backdrop to FASB action
    1. Marketplace pressures on banking, financial services industries in particular
    2. Key congressmen warn FASB, SEC to modify FAS 157 or they will
  2. New fair market value guidance
    1. Terms of FSP 157-e
      1. More judgment calls on fair values of financial instrument investments
      2. Preparers only must consider indicators of inactive markets
      3. New factors for concluding if a transaction is “orderly”
      4. Additional disclosures of valuation techniques and changes in practices
  3. New rules for valuing “other than temporary impairments” in securities
    1. Terms of FAS 115-a, FAS 124-a and EITF 99-20-b
      1. Decision limited to debt securities
      2. Holder can assert it will probably not sell interest before recovering basis
  4. New quarterly disclosures of fair values of securities investments
  5. Practical compliance approaches for mark-to-market decisions

Benefits

The panel will prepare you for these and other decisions in the new system:

  • Fair value judgments: Working under FSP 157-e to avoid writing down losses on investments.
  • Long-term impairments: New choices for debt investments from FAS 115-a, FAS 124-a and EITF 99-20-b.
  • New disclosure requirements: Gearing up for quarterly mark-to-market reports on financial instruments.
  • Divestitures: Effects on Treasury's efforts to rid banks of legacy loans and mortgage-backed securities.

Faculty

Xihao Hu
Xihao Hu
Partner, Regulatory and Capital Markets Consulting Group
Deloitte & Touche

He is the Southeast region leader for his firm's Financial Instruments and Valuation Resource Programs and co-leader of...  |  Read More

David Larsen
David Larsen

Managing Director
Duff & Phelps

He leads the firm's Corporate Finance Consulting Practice in San Francisco and is active in valuation and transaction...  |  Read More

Kenneth Fick
Kenneth Fick

Director, Forensic and Litigation Practice
FTI Consulting

He specializes in complex securities analyses and valuations related to corporate restructurings and litigation....  |  Read More

Mark C. Kanaly
Mark C. Kanaly

Partner
Alston & Bird

Mr. Kanaly's practice focuses on transactional and regulatory issues confronted by companies in the financial...  |  Read More

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