Duncan Faircloth: “several times during this session, the Securities Subcommittee of the Senate Banking Committee has held hearings on the…”

“several times during this session, the Securities Subcommittee of the Senate Banking Committee has held hearings on the issue of the Financial Accounting Standards Board (FASB) accounting standards for derivatives and other instruments. The hearings have demonstrated that there is great concern in the banking industry, and virtually every industry, about the FASB standards as they are presently written. In particular, there are concerns that the FASB will finalize these standards by the end of this year, without re-exposing its draft for further public comment. FASB has received hundreds of comment letters expressing concern about the new standards. Yet, the comments appear to go unheeded. In particular, there is concern in the banking industry that the standards are not taking into account the unique nature of banks. Even Alan Greenspan has taken the unusual step of expressing his concern to the FASB. The Chairman of the Federal Reserve Board of Governors said in his letter that ``FASB's planned approach would not improve the financial reporting of derivatives activities and would constrain prudent risk management practices.'' Mr. President, I am a strong supporter of Generally Accepted Accounting Principles. I strongly believe that these standards should be set by the private sector. I am concerned, however, that the FASB, a private organization, is working too closely with the SEC, and therefore, is ignoring the concerns raised by bank regulators.”