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Valuing Toxic Assets: Will New Accounting Standards Help?

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Executive Summary

Valuing asset securitizations always has been a difficult issue for the accounting profession. Now, with the recent collapse of the credit and financial markets, a new layer of complexity further complicates the equation. The author has studied some of the shortcomings in existing regulations that apply to asset securitization, as well as the abuses and confusion that resulted from these shortcomings. She thinks a few changes are in order, such as revamping income statements, requiring more disclosures, and using linked presentations of assets and liabilities to more accurately reflect net positions. One thing that is not on the author's agenda: suspending the mark-to-market standard, as some banks have advocated.

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