Removing Mark-to-Market Accounting Would Hurt Confidence, Says Geithner

The abolition of mark-to-market accounting would likely erode confidence in the U.S. financial system, said U.S. Treasury Secretary Tim Geithner in testimony before the Senate Budget Committee on Thursday.

While the accounting standard remains the jurisdiction of the Securities and Exchange Commission, lawmakers have attacked the standard for aggravating the value of losses on banks' balance sheets by valuing toxic securities at fire-sale prices.

Consequently, the possible removal of the standard is a hot topic among lawmakers.

Otherwise, the Treasury Secretary's comments resembled previous speeches, emphasizing the importance of stabilizing the U.S. financial system by restoring the flow of credit to help the broader economy.

He also told Congress that the financial system needs to be reformed to better handle the collapse of large financial institutions and that international initiatives are needed to strengthen the global financial system.

By Erik Kevin Franco and edited by Sarah Sussman
©CEP News Ltd. 2009