Oliver says that while fair-value is the most "prominent" accounting issue currently being debated, the bill was written to address more that just mark-to-market issues. In fact, she says that the bill is part of a "broader regulatory reform" effort being taken on by the Obama administration and others.

What's more, the idea of creating a new board has been spurred by "looking at the reality of how the [accounting] rules played out during the economic downturn," as well as examining how the SEC and FASB responded to the credit crisis, Oliver tells CFO.com. While "the idea of GAAP is great ... one size doesn't fit all," she notes.

She also confirms that the bill will be one of the key items discussed on Thursday during a Congressional hearing held by the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, of which Perlmutter and Lucas are members.

A Host of Opponents Likely
Opposition to the new board likely will come from investors, practitioners, and standard-setters that tout fair-value accounting's transparency, and the current FASB's independence. "Creating another new layer of governance is the wrong way to go," says Peter Iannone, a director with CBIZ MHM, an accounting provider. "The board as described in the bill would put non-accounting business people in an oversight position over the most technical aspects of the accounting profession," contends the accountant.

Iannone also believes the new board could thwart efforts by FASB and its overseas counterpart, the International Accounting Standards Board, to converge the two sets of standards into a single set of global accounting rules. "I do not believe that adding bankers and other to the mix at this time is going to make setting standards aimed at uniform presentation/consistency and reporting transparency easier," asserts Iannone. "The SEC has failed the investing public, few would argue against that. Creating a new standards oversight board on top of the FASB does nothing to address that."

Oliver insists that the new board is not meant to "hamstring" FASB in any way. This is not the first time, though, that politics have been seen by some as encroaching on FASB's independence. For example, in April 2007, the SEC used its authority to hold up approval of FASB's budget until the FAF agreed to give the regulator more say in the appointments of FASB members and FAF trustees.

The Options-expensing Battle
Perhaps the most notable instance of politics steering accounting policy was the battle over expensing stock options. Under intense pressure from Capitol Hill, FASB backed off from a 1994 stock options expensing rule. The heavy political pressure was seen as compromising not only the board's position on expensing, but its very independence as a standard setter.

At the time, Congress claimed no desire to end independent standard-setting, and the lawmakers asserted that they were trying to aid the struggling economy by encouraging greater use of entrepreneurial incentives. But many observers said that FASB's decision not to require options expensing may also have motivated executives to pump up their companies' stock prices by whatever means necessary.

In fact, the widespread use of nonexpensed stock options is generally thought to have led to inflated stock-market valuations, excessive executive compensation, accounting frauds, bankruptcies, and the loss of approximately $5 trillion.

By the next decade, the massive stock-option backdating scandal underscored the problems with allowing the true cost of stock options to be removed from income statements, and by 2004, FASB passed FAS 123R, which required companies to expense stock options based on the fair value of the options on the grant date.

While it is unclear what position new SEC chairman Mary Schapiro will take — both the SEC and FASB declined to comment on the Perlmutter-Lucas bill — former SEC chairman Christopher Cox defended fair-value accounting last year amid calls by bankers to suspend the rules. After the SEC was directed by Congress to study the potential roll-back of fair value accounting, Cox announced in December that the regulator would not pull the plug on mark-to-market accounting. At an industry meeting that same month, Cox publicly stated that, "Accounting standards aren't just another financial rudder to be pulled when the economic ship drifts in the wrong direction ... Instead they are the rivets in the hull, and you risk the integrity of the entire economy by removing them." 

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