In a U.S. office park, accountants shore up Wall Street

By Al Yoon

NORWALK, Connecticut (Reuters) - In just a few hours on Thursday morning at an office park in suburban Connecticut, a handful of accountants voted through rule changes that some investors, bankers and lawmakers believe will help solve the global financial crisis.

Sitting around a simple wooden table and dressed in unremarkable business attire, the five members of the Financial Accounting Standards Board moved to relax mark-to-market accounting rules that will give banks leeway to report smaller losses and asset writedowns from toxic assets.

That means the banks' balance sheets will appear stronger and they could lend more money to help consumers and businesses avoid some of the worst of the deep downturn. The response 45 miles away on Wall Street was clear -- financial stocks rose as part of a wider rally that has now pushed the Standard & Poor's 500 index up 23 percent in less than a month.

The sometimes jovial atmosphere at the meeting of a body that doesn't usually attract much interest outside the world of auditors and company accounting officers, was in stark contrast to the grilling that FASB Chairman Bob Herz got three weeks ago when he went to Washington to meet lawmakers.

It was at a House of Representatives subcommittee meeting that some believe the decisions were made and that the votes on Thursday were merely rubber-stamping. Herz had been told by lawmakers that if he didn't come up with changes in the mark-to-market rule within three weeks then there would be legislation to change the rules.

Herz, relaxed and leaning back in his chair, calmly led the meeting and a press conference afterwards. He became more stern, however, when responding to questions about the board's independence in the face of congressional pressure.

He said that, despite a much faster consultative process than usual for a rule change, "we probably got more input on this than when we have a three-month period," he said. So it's not right to "impugn our motives ... that's unfair."

He could also point to a split vote on one of the changes that will let lenders take smaller losses on impaired assets, with Herz, Leslie Seidman and Larry Smith voting in favor and Tom Linsmeier and Marc Siegel against. The board voted unanimously to let banks exercise more judgment in mark to market accounting.