Chapter 40

Fair Value Accounting, Disclosure and Financial Stability

R.J. Herring

University of Pennsylvania, Philadelphia, PA, USA



Virtually every chief executive officer of a failed financial institution blamed fair value accounting (FVA) along with short-sellers and hedge funds for his firm’s plight. For example, Martin Sullivan, then CEO of AIG singled out FVA as a major cause of the crisis and called for its suspension.1 But CEOs were not alone in blaming FVA for the crisis. Former FDIC Chairman William Isaac asserted “The SEC ...

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