SAN FRANCISCO -Wednesday's FASB decision to tweak fair value accounting rules won't affect credit unions much, but it's an important step in the right direction, said Scott Waite, senior vice president and chief financial officer of the $4.2 billion Patelco Credit Union.
Waite serves on the FASB's Small Business Advisory Committee and has served as an adviser for six years this month.
The decision pertains to a subset class of securities, EITF 99-20, which were typically rated "A" or below at time of purchase, and therefore not a common investment vehicle on credit union balance sheets.
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"As far as to the degree this helps corporates, I'd say they're better off than were they were last week, but it doesn't alleviate their concerns by any stretch of the imagination," he said.
However, Waite said he expects the board to address two other-than-temporary-impairment issues over the next six months: the requirement to write down impaired investments to fair market value, rather than merely writing down the actual loss amount, and whether or not to allow the reversal of OTTIs under the proper criteria.
While accounting standards could use some improvement, fair value accounting has considerable merit, Waite said, and he warned financial managers against anticipating any major changes.
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