FAS 157, the controversial fair accounting rule, will be the topic of a roundtable today at the Securities and Exchange Commission. As you know, the rule has become the center of much controversy, with more than a few pundits and experts blaming the rule for the financial meltdown. My guess is that some sort of compromise will eventually be agreed upon, perhaps noting alternative valuations in footnotes.

No one quibbles with marking to market when dealing with deeply traded securities, but for illiquid securities, the critics definitely have a point. Marking to the last trade may not necessarily be the best idea. Obviously, it can instantly cause some shocking losses.

The issue has become somewhat politicized as of late. The TARP reaffirmed that the SEC has the authority to suspend the rule and mandated more study, hence the roundtable. I would be interested to hear comments that argue the recently updated guidance on FAS 157 isn't a reasonable path (from FierceSarbox). Auditors may have placed way too much emphasis on last-sale data, when there were other options available.

For more:
- here's a Fortune overview

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