At its board meeting yesterday, the Financial Accounting Standards Board discussed its joint project on leasing - a project it is conducting jointly with the International Accounting Standards Board. The IASB was slated to discuss the issue today, as the two boards strive to reach a consensus in remaining areas in preparation for publishing a Discussion Paper (DP) on leasing.
The joint project on leasing is one of the major convergence projects on FASB-IASB's Memorandum of Understanding (MOU). The MOU, dating back to the "Norwalk Agreement" in 2002, and updated several times since then (most recently, in Sept. 2008), outlines the plan of the two boards to achieve (on major projects, by 2011), "Convergence of accounting standards ... through the development of high quality, common standards over time."
According to the board’s technical plan, the DP on leasing is slated to be released for public comment 1Q09. Based on information contained in yesterday’s FASB board handout, the staff was prepared to recommend a 120 day comment period for the DP. However, the board did not formally address the comment period issue and was not formally requested to authorize the ballot draft yet, since they asked the staff to come back with further analysis of one issue: subleasing.
Although the current project is scoped to lessee accounting, FASB board members suggested doing a 'sense check' in terms of potential issues of symmetry in lessor accounting, including considering the board's views on insubstance purchase (sale) of assets vs. right of use. Additionally, board members suggested doing a 'sense check' of their views in the leasing project vis-a-vis the separate project on revenue recognition, and that consideration of these issues at this time (prior to issuing the DP) may be a useful approach.
A couple of the 14 issues taken up by FASB yesterday on leasing were deliberated for about an hour each; we have included highlights from one of those issues (measurement) below. For further details see this FEI summary, and for the official results look for the Summary of Board Decisions which FASB generally posts within a day of its board meetings, in FASB’s News Center. (Given the back-to-back FASB and IASB board meetings on leasing, I wonder if perhaps some kind of joint summary of board decisions will be published.)
Measurement of leases, including contingent rents
FASB board members spent over an hour discussing the issue of measurement of leases, including contingent rents. The three alternatives considered were: (1) probability weighting or expected outcome (preferred by the IASB board in an earlier vote), (2) best estimate, and (3) most likely amount (e.g. of rents to pay).
A great deal of the discussion revolved around a debate between whether the ‘best estimate’ could be skewed if someone presumed the most likely outcome was the minimum lease payments, and depending on how contingent lease payments such as performance based payments were estimated or probability weighted (e.g. contingent lease payments based on hitting certain sales targets)
The IASB is understood to be leaning toward a probability weighted or ‘expected outcome’ approach. FASB Chairman Robert Herz noted a probability weighted approach could be more complex than a best estimate approach.
FASB board and staff members asked the IASB project directors who participated in the meeting by phone to explain how, in practice, they believed a probability weighted approach would be performed. IASB project manager Rachel Knubley gave as an example, “We would say, if there is a 10% probability sales of 100, 50% probability of sales of 200 and 40% probability of sales of 300; take the probability weighted average of those three outcomes.”
IASB project manager Simon Peerless added, “In many cases, that will be best you can do, where you have more detailed forecasts, you should be required to use those, rather than just 3 points.”
FASB board member Larry Smith said, “If you ask [IASB board member Jim] Leisenring whether that would represent a probability assessment, he would say no.” The implication was that some may view probability weighted assessments as requiring a more complex, statistically based mathematical approach.
A FASB staff member asked the IASB staff: “In practice, do they do all those probabilities and show auditors those workpapers?”
IASB’s Knubley replied, “It depends, if you have warranties, you would be expected to present good [details], vs. … back of the envelope; lessees may have just one lease; [some may say] all we’re doing is a back of the envelope calculation.”
Herz responded to the IASB staff’s explanation that a back of the envelope calculation may be viewed as fulfilling a probability weighting requirement: “That is OK in a lot of jurisdictions, but if you use those words [probability weighted] in our jurisdiction, it will force people to come up with things they don’t believe in, just to satisfy auditors.” He added, “We would not preclude somebody [from using probability weighting to determine best estimate], but we don’t want to use words that make people do things they don’t do.”
Additionally, Herz observed, “One of the unfortunate problems, realities in the world, seems to be [that using] the same words would be nice, but the same words are not going to produce the same practice, we found … [we’re] not knocking the IASB, [but there is the] issue of auditing, enforcement, all that in other parts of the world” which have to be reckoned with.
FASB board member Larry Smith explained further the potential ramifications of requiring a probability weighted approach in the U.S., saying: “We are trying to avoid making people prepare excel spreadsheets up the wazoo, which they aren’t doing, and across the Atlantic, if they don’t require people to do those workpapers, and if they deem a back of the envelope estimate to be a probability outcome….”
Linsmeier added, “They [the IASB] have to understand it’s an application issue, and a witchhunt on looking for twenty different views [in a probability weighting].”
The IASB board will be presented with the same questions on November 20 which the FASB voted on November 19. Knubley suggested alternative views be provided in the DP.
Smith added, “We had an objective to minimize differences, if we don’t eliminate them all, but eliminate some, we’ve accomplished something.”
Thursday, November 20, 2008
Tuesday, November 18, 2008
SEC Chairman Speaks at FEI Conf. on Future Of Int’l Standards, Cooperation
In a keynote address at FEI’s Current Financial Reporting Issues Conference earlier today, SEC Chairman Christopher Cox spoke of the future of international standards – including SEC’s recently released proposed roadmap on International Financial Reporting Standards – and highlighted other aspects of international regulatory cooperation. Some things Cox reviewed were familiar, including the principles the SEC will rely on to decide whether to permit – or require – U.S. companies to file financial reports with the SEC in IFRS instead of U.S. GAAP, and the scale of international cooperation on enforcement matters.
Cox commented on the important role of the U.S.: “While the United States has some obvious and correctable regulatory gaps, we have also set the highest regulatory standards for our markets of any country on earth. We should use the power of those markets to help raise world standards — which is the aim of our nascent mutual recognition initiative. The flight to quality that is currently underway is but the latest reminder that in the long run, countries can only win the global competition for capital by protecting investors with stronger, more transparent markets. It is not mere coincidence that the world's largest capital market, by far, also has the world's highest standards.”
I hope to provide additional highlights from the conference later this week, meantime check out the reporting done by Francine McKenna, author of the Re:The Auditors blog, and if you have a subscription to BNA, see the articles by Steve Burkholder IASB, FASB Heads Stress Need for BoardsTo Cooperate During Current Global Crisis and Denise Lugo Controllers Say No to Adopting IFRSWithout More Accounting Convergence. In CFO.com, see IFRS Requires a Soft Touch by Marie Leone, Wrinkles in the IFRS Roadmap by Sarah Johnson and David McCann, and SEC: IFRS Early Adoption Will Cost $32 Million by Sarah Johnson and Marie Leone. NOTE: In a session I attended at the FEI conference yesterday, panel moderator Eric Smith of Credit Suisse noted his company estimated it would cost $200 million and take 18 months to implement IFRS in the U.S.
Additional reporting from the conference can be found in SEC’s Cox Urges Global Regulators to Cooperate More by Emily Chasan of Reuters, and SEC Publishes IFRS Roadmap by Michael Cohn in WebCPA. (If I see links to other publications I will add them to this post or a future post.)
One major new point I do not believe Cox has stated previously concerned his views on international regulation vs. international cooperation. [NOTE: BNA's Malina Manickavasagam points out in an article Nov. 19 that Cox had previously commented on IOSCO's role in a Nov. 8 2007 speech at an IOSCO conference.] His remarks at the FEI conference were timely in light of the recently completed G-20 economic summit, in which it had been reported prior to the summit (but not formally recommended during the summit) that some countries were in favor of forming a global or supranational regulator, particularly in light of the global financial market crisis. (See U.S. Does Not Support a Global Crisis Regulator by Mark Landler in the Nov. 6 NYT.)
Cox told the FEI conference: “My experience over the last three years in the leadership of the International Organization of Securities Commissions has convinced me of both the value of close international consultation and the inadvisability of IOSCO's becoming a global securities regulator.”
Drawing a distinction between convergence of regulations vs. one single regulatory body, he noted, “Securities regulations can and should be converged to a far higher degree than we have already attained. But it is unrealistic to think we could or should make them identical, because of differences in national laws, economic conditions, and objectives. These differences are healthy and normal. It is entirely reasonable for a nation to view its responsibility to its own citizens and markets as paramount. The Securities and Exchange Commission is responsible for the protection of American investors, and it will never compromise that mission. Nor should any other national regulator. One of the reasons for the remarkable success of IOSCO is that it understands this very well.”
Drawing a distinction between convergence of regulations vs. one single regulatory body, he noted, “Securities regulations can and should be converged to a far higher degree than we have already attained. But it is unrealistic to think we could or should make them identical, because of differences in national laws, economic conditions, and objectives. These differences are healthy and normal. It is entirely reasonable for a nation to view its responsibility to its own citizens and markets as paramount. The Securities and Exchange Commission is responsible for the protection of American investors, and it will never compromise that mission. Nor should any other national regulator. One of the reasons for the remarkable success of IOSCO is that it understands this very well.”
He added: “There is yet another reason that global consultative bodies should not aspire to become global regulators. As we have learned to our misfortune time and again, international agencies often are forced to regulate to the lowest common denominator. Of necessity, they must yield to the average rather than the highest standards of their members in order to achieve consensus. Worse, the tensions that every national regulator is bound to reconcile — of factions and stakeholders, not to mention of parliaments, legislatures, and executive authorities — are multiplied a hundredfold in international bodies. These are concerns that should be considered seriously before assigning the function of global systemic risk “czar” or any similar responsibility to an international body.”
Cox commented on the important role of the U.S.: “While the United States has some obvious and correctable regulatory gaps, we have also set the highest regulatory standards for our markets of any country on earth. We should use the power of those markets to help raise world standards — which is the aim of our nascent mutual recognition initiative. The flight to quality that is currently underway is but the latest reminder that in the long run, countries can only win the global competition for capital by protecting investors with stronger, more transparent markets. It is not mere coincidence that the world's largest capital market, by far, also has the world's highest standards.”
FEI was honored to have Chairman Cox speak at our 27th annual CFRI conference, and members of the SEC staff (Chief Accountant Conrad Hewitt, Deputy Chief Accountant Jim Kroeker, Corp Fin Director John White), IASB Chairman Sir David Tweedie, FASB Chairman Robert Herz and members of FASB staff (Technical Director Russell Golden, Project Director Pat Donoghue and Valuation Fellow Kristofer Anderson), and many other distinguished speakers. See also the interview of Chairman Cox by Executive Editor Ellen M. Heffes in this month's issue of Financial Executive Magazine: SEC Chair Tackles U.S. Credit Crisis, IFRS and Much More. NOTE: If you are not an FEI member you will be prompted to create a free online login account to read articles in our magazine.
I hope to provide additional highlights from the conference later this week, meantime check out the reporting done by Francine McKenna, author of the Re:The Auditors blog, and if you have a subscription to BNA, see the articles by Steve Burkholder IASB, FASB Heads Stress Need for BoardsTo Cooperate During Current Global Crisis and Denise Lugo Controllers Say No to Adopting IFRSWithout More Accounting Convergence. In CFO.com, see IFRS Requires a Soft Touch by Marie Leone, Wrinkles in the IFRS Roadmap by Sarah Johnson and David McCann, and SEC: IFRS Early Adoption Will Cost $32 Million by Sarah Johnson and Marie Leone. NOTE: In a session I attended at the FEI conference yesterday, panel moderator Eric Smith of Credit Suisse noted his company estimated it would cost $200 million and take 18 months to implement IFRS in the U.S.
Additional reporting from the conference can be found in SEC’s Cox Urges Global Regulators to Cooperate More by Emily Chasan of Reuters, and SEC Publishes IFRS Roadmap by Michael Cohn in WebCPA. (If I see links to other publications I will add them to this post or a future post.)
I was excited to finally meet McKenna (having gotten to know her virtually through our blogs); pictured with me here (below) at the FEI conference are Re: The Auditor's Francine McKenna on the left and BNA Managing Editor Susan Webster on the right.
Cox concluded his remarks today: “No organization more than FEI has better understood the imperatives of the global capital markets. Your work in recent months, both as an organization, and individually in your many professional capacities, has made it crystal clear that you understand the dangers of taking a parochial view of the markets and our economies. And your leadership in working toward clear and consistent international standards for financial reporting has made you valuable allies of the SEC. As we continue our important work of protecting investors, maintaining fair and orderly markets, and promoting capital formation, we are proud to have you as our partners.”
We hope you like the FEI blog’s new and improved format. We have also expanded our blogroll on the right to provide you with more resources, and we are now a member of the Forbes Business and Finance Blog Network. As always, we welcome your comments on the blog, either by posting them, or if you prefer a less public dialogue (or to get on our email list) send an email (request) to: blogs@financialexecutives.org.
We hope you like the FEI blog’s new and improved format. We have also expanded our blogroll on the right to provide you with more resources, and we are now a member of the Forbes Business and Finance Blog Network. As always, we welcome your comments on the blog, either by posting them, or if you prefer a less public dialogue (or to get on our email list) send an email (request) to: blogs@financialexecutives.org.
Sunday, November 16, 2008
G-20 Recommends Specific Actions
The Declaration issued at the conclusion of yesterday’s G-20 Summit on Financial Markets and the Economy laid out specific actions to be taken by accounting standard–setters, regulators, finance ministers and others, some of which are to be accomplished by March 31, 2009. The areas of focus the G-20 ask accounting standard setters to address include valuation and disclosure of complex financial instruments- especially in times of stress, accounting and disclosure for off-balance sheet vehicles, and enhancing governance of the International Accounting Standards Board. Finance ministers are also directed to address, in consultation with other existing bodies, issues including mitigating procyclicality in regulatory policy, and reviewing and aligning global accounting standards, particularly in the area of complex securities.
Root Causes of Crisis
The G-20 noted their consensus view on root causes of the credit crisis included unsound risk management practices, increasingly complex and opaque financial products, excessive leverage, inconsistent and insufficiently coordinated macroeconomic policies, and inadequate structural reforms. Additionally, the G-20 observed: “policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.”
Action Plan Based on Five Principles for Reform
The G-20 Declaration includes an Action Plan that details priority actions (to be accomplished by March 31, 2009) and medium-term actions to be taken consistent with 5 common principles of reform:
1. Strengthening Transparency and Accountability
2. Enhancing Sound Regulation – including with respect to Regulatory Regimes, Prudential Oversight, and Risk Management,
3. Promoting Integrity in Financial Markets
4. Reinforcing International Cooperation
5. Reforming International Financial Institutions (IFIs), including the IMF, and expanding the Financial Stability Forum to a broader membership of emerging economies
The G-20 finance ministers, working in coordination with G-20 leadership (currently Brazil, the U.K. and the Republic of Korea) have been tasked with overseeing actions taken by regulators, IFIs, accounting-standard setters and others to accomplish these reforms.
Actions to be Taken by Accounting Standard-Setters and Regulators
Under the heading: Strengthening Transparency and Accountability, the G-20 asks that accounting standard-setters and regulators take the following actions. (Note: additional actions for regulators are described in other sections of the action plan.)
Immediate Actions by March 31, 2009
- The key global accounting standards bodies should work to enhance guidance for valuation of securities, also taking into account the valuation of complex, illiquid products, especially during times of stress.
- Accounting standard setters should significantly advance their work to address weaknesses in accounting and disclosure standards for off-balance sheet vehicles.
- Regulators and accounting standard setters should enhance the required disclosure of complex financial instruments by firms to market participants.
- With a view toward promoting financial stability, the governance of the international accounting standard setting body should be further enhanced, including by undertaking a review of its membership, in particular in order to ensure transparency, accountability, and an appropriate relationship between this independent body and the relevant authorities.
- Private sector bodies that have already developed best practices for private pools of capital and/or hedge funds should bring forward proposals for a set of unified best practices. Finance Ministers should assess the adequacy of these proposals, drawing upon the analysis of regulators, the expanded FSF, and other relevant bodies.
Medium-term actions
- The key global accounting standards bodies should work intensively toward the objective of creating a single high-quality global standard. * Regulators, supervisors, and accounting standard setters, as appropriate, should work with each other and the private sector on an ongoing basis to ensure consistent application and enforcement of high-quality accounting standards.
- Financial institutions should provide enhanced risk disclosures in their reporting and disclose all losses on an ongoing basis, consistent with international best practice, as appropriate. Regulators should work to ensure that a financial institution' financial statements include a complete, accurate, and timely picture of the firm's activities (including off-balance sheet activities) and are reported on a consistent and regular basis.
- In addition the G-20 state: “In consultation with other economies and existing bodies, drawing upon the recommendations of such eminent independent experts as they may appoint, we request our Finance Ministers to formulate additional recommendations, including in the following specific areas:
1. Mitigating against pro-cyclicality in regulatory policy;
2. Reviewing and aligning global accounting standards, particularly for complex securities in times of stress;
3. Strengthening the resilience and transparency of credit derivatives markets and reducing their systemic risks, including by improving the infrastructure of over-the-counter markets;
4. Reviewing compensation practices as they relate to incentives for risk taking and innovation;
5. Reviewing the mandates, governance, and resource requirements of the IFIs [International Financial Institutions, e.g. the Financial Stability Forum and the IMF]; and
6. Defining the scope of systemically important institutions and determining their appropriate regulation or oversight.
Some may observe that the SEC’s release of its proposed IFRS Roadmap on November 14 may be viewed as a step consistent with point 2 above (aligning global accounting standards, generally). More specifically, with respect to aligning global standards for complex securities, FASB and the IASB have a number of initiatives currently under way, including a series of roundtables and a high level advisory group, and the SEC is currently conducting a study of the impact of mark-to-market (fair value) accounting which Congress requested the SEC to report on by Jan. 2. In related news, the second in a series of SEC’s roundtables on MTM is slated to take place on Friday, Nov. 21. (See our prior post on SECs Oct. 29 MTM roundtable.)
Officials Note Some Changes May Seem Technical, Mundane, But Are Not
A press briefing by Senior Administration Officials at the White House yesterday on the results of the G-20 meeting included references to the accounting-related recommendations. One official said, “I'm going to turn to my colleague in a moment to walk us through some of the very concrete steps and measures and decisions that were adopted … let me point out that a number of these may sound very technical or very mundane. I can assure you they are not. These technical changes, these agreements to change practices or enhance rules and regulations, this is the stuff of financial markets reform.”
The next “Senior Administration Official” stated, according to the transcript: “Well, after that description of what I'm going to talk about, I'm sure you're all on the edge of your seat. (Laughter.) This is my life. I've been living this stuff. I want you to get all excited about it.” The official added: “So there was, for a leaders meeting… probably a more detailed and more substantive discussion of a number of topics … given the nature of this broader subject than you would have expected. And within the context of strengthening transparency and accountability, the leaders had a conversation about the need for better disclosure. And as part of the action plan, there was a specific commitment made that by March 31st of 2009, regulators and accounting standard setters should have required enhanced disclosure of complex instruments by firms to market participants. So a very specific -- one of many of the 47 -- but a very specific request that kind of makes sense as you think about some of the challenges we have had over the last year and how they've been driven by the lack of transparency and the complexity of a number of these products.”
Root Causes of Crisis
The G-20 noted their consensus view on root causes of the credit crisis included unsound risk management practices, increasingly complex and opaque financial products, excessive leverage, inconsistent and insufficiently coordinated macroeconomic policies, and inadequate structural reforms. Additionally, the G-20 observed: “policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.”
Action Plan Based on Five Principles for Reform
The G-20 Declaration includes an Action Plan that details priority actions (to be accomplished by March 31, 2009) and medium-term actions to be taken consistent with 5 common principles of reform:
1. Strengthening Transparency and Accountability
2. Enhancing Sound Regulation – including with respect to Regulatory Regimes, Prudential Oversight, and Risk Management,
3. Promoting Integrity in Financial Markets
4. Reinforcing International Cooperation
5. Reforming International Financial Institutions (IFIs), including the IMF, and expanding the Financial Stability Forum to a broader membership of emerging economies
The G-20 finance ministers, working in coordination with G-20 leadership (currently Brazil, the U.K. and the Republic of Korea) have been tasked with overseeing actions taken by regulators, IFIs, accounting-standard setters and others to accomplish these reforms.
Actions to be Taken by Accounting Standard-Setters and Regulators
Under the heading: Strengthening Transparency and Accountability, the G-20 asks that accounting standard-setters and regulators take the following actions. (Note: additional actions for regulators are described in other sections of the action plan.)
Immediate Actions by March 31, 2009
- The key global accounting standards bodies should work to enhance guidance for valuation of securities, also taking into account the valuation of complex, illiquid products, especially during times of stress.
- Accounting standard setters should significantly advance their work to address weaknesses in accounting and disclosure standards for off-balance sheet vehicles.
- Regulators and accounting standard setters should enhance the required disclosure of complex financial instruments by firms to market participants.
- With a view toward promoting financial stability, the governance of the international accounting standard setting body should be further enhanced, including by undertaking a review of its membership, in particular in order to ensure transparency, accountability, and an appropriate relationship between this independent body and the relevant authorities.
- Private sector bodies that have already developed best practices for private pools of capital and/or hedge funds should bring forward proposals for a set of unified best practices. Finance Ministers should assess the adequacy of these proposals, drawing upon the analysis of regulators, the expanded FSF, and other relevant bodies.
Medium-term actions
- The key global accounting standards bodies should work intensively toward the objective of creating a single high-quality global standard. * Regulators, supervisors, and accounting standard setters, as appropriate, should work with each other and the private sector on an ongoing basis to ensure consistent application and enforcement of high-quality accounting standards.
- Financial institutions should provide enhanced risk disclosures in their reporting and disclose all losses on an ongoing basis, consistent with international best practice, as appropriate. Regulators should work to ensure that a financial institution' financial statements include a complete, accurate, and timely picture of the firm's activities (including off-balance sheet activities) and are reported on a consistent and regular basis.
- In addition the G-20 state: “In consultation with other economies and existing bodies, drawing upon the recommendations of such eminent independent experts as they may appoint, we request our Finance Ministers to formulate additional recommendations, including in the following specific areas:
1. Mitigating against pro-cyclicality in regulatory policy;
2. Reviewing and aligning global accounting standards, particularly for complex securities in times of stress;
3. Strengthening the resilience and transparency of credit derivatives markets and reducing their systemic risks, including by improving the infrastructure of over-the-counter markets;
4. Reviewing compensation practices as they relate to incentives for risk taking and innovation;
5. Reviewing the mandates, governance, and resource requirements of the IFIs [International Financial Institutions, e.g. the Financial Stability Forum and the IMF]; and
6. Defining the scope of systemically important institutions and determining their appropriate regulation or oversight.
Some may observe that the SEC’s release of its proposed IFRS Roadmap on November 14 may be viewed as a step consistent with point 2 above (aligning global accounting standards, generally). More specifically, with respect to aligning global standards for complex securities, FASB and the IASB have a number of initiatives currently under way, including a series of roundtables and a high level advisory group, and the SEC is currently conducting a study of the impact of mark-to-market (fair value) accounting which Congress requested the SEC to report on by Jan. 2. In related news, the second in a series of SEC’s roundtables on MTM is slated to take place on Friday, Nov. 21. (See our prior post on SECs Oct. 29 MTM roundtable.)
Officials Note Some Changes May Seem Technical, Mundane, But Are Not
A press briefing by Senior Administration Officials at the White House yesterday on the results of the G-20 meeting included references to the accounting-related recommendations. One official said, “I'm going to turn to my colleague in a moment to walk us through some of the very concrete steps and measures and decisions that were adopted … let me point out that a number of these may sound very technical or very mundane. I can assure you they are not. These technical changes, these agreements to change practices or enhance rules and regulations, this is the stuff of financial markets reform.”
The next “Senior Administration Official” stated, according to the transcript: “Well, after that description of what I'm going to talk about, I'm sure you're all on the edge of your seat. (Laughter.) This is my life. I've been living this stuff. I want you to get all excited about it.” The official added: “So there was, for a leaders meeting… probably a more detailed and more substantive discussion of a number of topics … given the nature of this broader subject than you would have expected. And within the context of strengthening transparency and accountability, the leaders had a conversation about the need for better disclosure. And as part of the action plan, there was a specific commitment made that by March 31st of 2009, regulators and accounting standard setters should have required enhanced disclosure of complex instruments by firms to market participants. So a very specific -- one of many of the 47 -- but a very specific request that kind of makes sense as you think about some of the challenges we have had over the last year and how they've been driven by the lack of transparency and the complexity of a number of these products.”
The level of engagement of the G-20 officials in discussing accounting-related matters was specifically commented on by the senior administration official, who described one aspect of the G-20 summit as: “not so much the content of the actions, because people don't follow valuation of securities and FASB and accounting standards so closely -- but how detailed and concrete and immersed in the detail these leaders were. They weren't talking at this level and saying, oh, experts will deal with this. This was a very detailed discussion by the leaders themselves about what needed to be done, both at the most specific level and also, stepping back, the affirmation of these core principles.”
Commitment to an Open Global Economy; Caution on Over-Regulation
The G-20 reaffirmed their commitment to an open global economy. As noted in the Declaration, they stated, “We recognize that these reforms will only be successful if grounded in a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems.”
Additionally, the G-20 state: “Recognizing the necessity to improve financial sector regulation, we must avoid over-regulation that would hamper economic growth and exacerbate the contraction of capital flows, including to developing countries.” See the Declaration for a full discussion of the G-20 views on maintaining an open global economy and other matters.
Next Meeting By April 30
The G-20 agreed to meet again by April 30, 2009. President George W. Bush hosted yesterday’s G-20 summit in Washington, DC, we cited the President’s opening remarks in our post on Friday. President-elect Barack Obama did not attend this weekend’s G-20 meeting (he has been quoted as emphasizing the U.S. has one administration and one President at a time), however he sent former Secretary of State Madeleine Albright and former Congressman Jim Leach to meet privately with representatives of the G-20 nations. Albright and Leach noted in a statement, as reported in this Reuters article in the New York Times, "The president-elect believes that the G20 summit of leaders from the world's largest economies is an important opportunity to seek a coordinated response to the global financial crisis.”
Important Notice for Subscribers
If you have not seen it already, please see the important notice for subscribers at the bottom of our Nov. 14 post, regarding changes to this blog taking effect Monday, Nov. 17.
Subscribe to:
Posts (Atom)
Posts
