The Financial Times reports that investors fear that the new accounting rules proposed by European regulators might mask the onset of another credit crisis.
Under the new rules, financial institutions would be required to second guess whether the loans that they originated could default. As this is very similar to what happened during the recent financial crisis, Tim Bush, head of governance and financial analysis at Pirc, considers that the proposal does not reflect the economic reality.
Following a consultation period, the European Financial Reporting Advisory Group (EFRAG) considers responses from investors and companies before advising the European Commission whether to accept the new rules.
Full Financial Times article (subscription required).
These news come, after earlier this year, it was reported that the European Commission stated that there was no clear evidence that adopting the international accounting rules worsened Europe’s credit crisis. It was also underlined that benefits of these rules outweighed the costs.
Full Yahoo and MarketWatch articles.