Reactions to the recent Accounting Standards Update on financial instruments are rolling in.  Start with this one from Bloomberg/Businessweek:

Banks including Bank of America Corp., based in Charlotte, North Carolina, and San Francisco-based Wells Fargo & Co. already report the fair value of their loans in the footnotes of their quarterly reports to regulators.

Bank of America’s carrying value for some of its loans at March 31 was $908 billion, or $23.9 billion more than the fair value, the company said in a regulatory filing. The fair value of Wells Fargo’s net loans was about $21 billion less than the amount at which the bank reported them in the first quarter, according to a regulatory filing.

“FASB’s proposal for mark-to-market accounting presents significant problems, not only for banks, but also the general economy,” Edward Yingling, chief executive officer of the American Bankers Association, said in a statement. “The proposal would greatly undermine the availability of credit by making it difficult to make many long-term loans, the value of which, even if performing perfectly, would likely be reduced on the day a loan is made.”

Mr. Yingling appears to be assuming that regulators must piggy-back on financial reporting standards.  Just because the assumption is common doesn’t make piggybacking any more reasonable.