Not all of the representatives at the hearing demanded changes to the accounting rules. In the minority was Florida Democrat Alan Grayson, who spoke last. Essentially, Grayson wants to keep fair-value accounting intact. He wryly compared changing mark-to-market rules to what he considered other outlandish ideas.

For example, it would be like changing the circumference measurement Pi from 3.14 to 4 so the crowded circular highway around Washington known as the Beltway would be expanded; or increasing the size of an inch so he could be more comfortable on a plane; or make the number 98 larger than 109, so the loss the Washington Wizards pro basketball team had just suffered at the hands of the New Orleans Hornets would be recorded as a win. "Does it make sense to kill the messenger?" he asked the panel.

Kroeker asserted that the SEC did not advocate suspending fair-value rules. But he did admit that the standards "warrant improvement" in areas other than "scorekeeping," such as how to determine fair value and how to calculate other-than-temporary income. Likewise, his boss, SEC chair Mary Schapiro, told a separate House subcommittee yesterday that FASB needs to guide companies on how to provide "a better application" for determining what assets are worth.

For his part, Herz pointed out that "the single largest assets on a bank's balance sheet ­- if it is not a money center bank - are loans, which are carried at historical cost and do not reflect the [fair-value] problem." He also agreed with Grayson's assessment that most of the fair-value critics "clamoring" for a rule change were part of institutions on the brink of insolvency.

Indeed, while Herz said that there were valid issues about fair-value accounting that FASB would address, he said that he often had visits from critics that became insolvent a few weeks after visiting him at FASB. The "most vocal opponents" of fair value have been institutions that have failed and have received billions of dollars in handouts from taxpayers, Herz told Congress.

Both Grayson and Herz also saw eye-to-eye on one other subject, that some banks that may not have fully disclosed their dire financial position yet. "Bank stocks continue to trade below their accounting book value," noted Herz. "Which means," added Grayson, "that there may be institutions that are insolvent that have not written down [assets] enough yet, and want [rule] changes before they have to disclose that."

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