"Financial Firms Spent $27.6 Million Lobbying For Mark To Market Rule Change"
Back in April, the Financial Accounting Standards Board (FASB) changed the mark to market accounting rule, which gave banks more leeway in assessing the value of securities that they hold on their books. As Floyd Norris reported at the time, “the change seems likely to allow banks to report higher profits by assuming that the securities are worth more than anyone is now willing to pay for them.”
Today, the Wall Street Journal revealed just how much the banks were willing to pay to bring the change about:
Marshalling a multimillion-dollar lobbying campaign, these firms persuaded key members of Congress to pressure the accounting industry to change the rule in April. The payoff is likely to be fatter bottom lines in the second quarter. […]
Earlier this year, financial-services organizations put their lobbyists on the case. Thirty-one financial firms and trade groups formed a coalition and spent $27.6 million in the first quarter lobbying Washington about the rule and other issues, according to a Wall Street Journal analysis of public filings. They also directed campaign contributions totaling $286,000 to legislators on a key committee, many of whom pushed for the rule change, the filings indicate.
As Andrew Leonard put it, this “is as well documented a case of big-bucks lobbyists succeeding in getting the rules changed in favor of their clients as you will ever see.”
At the time, FASB was widely criticized for caving to political pressure by deciding to make the change. And in fact, according to the Journal’s report, following the change, “three [FASB] members threatened to resign in protest, concerned that FASB had jeopardized its credibility.”