John Kerry: “the Financial Accounting Standards Board, which establishes the accounting principles for the private sector in this…”

“the Financial Accounting Standards Board, which establishes the accounting principles for the private sector in this country, is currently in the midst of a major controversy. FASB has proposed a rule that will require companies to amortize the value of stock options and deduct them off of their earnings statements, with the values derived not from current market prices, but from estimates of future prices derived by computer models. FASB hearings on the subject will begin this week. Many of us have been reluctant to wade into this controversy, because of our fear of politicizing a process that must aspire to absolute clarity and fairness. After all, the day Congress begins devising the Generally-Accepted Accounting Principles is the day they become Generally Unaccepted Accounting Principles. Moreover, FASB's stock option proposal--and the considerable support it has received from our colleague from Michigan, Senator Levin--were catalyzed by a phenomenon that many of us decried throughout the 1980s, the relentless and often-spectacular increases in executive compensation and bonuses awarded by companies that were otherwise losing money, laying-off workers, and dragging down shareholders. Yet, however well-motivated FASB might have been at the start, I am now convinced that its effort has run off the rails.”