Accounting Standards: Treatment of Asset-Backed Securities

Pursuant to a congressional request, GAO provided information on whether the greater discretion allowed to banks as opposed to securities broker/dealers under accounting standards and practices may have resulted in less transparency in the value of asset-backed securities held by banks, focusing on: (1) mortgage-backed securities (MBS); (2) the accounting treatment applied to securities (including MBS) held by banks and broker/dealers; and (3) the accounting for securities holdings by the six largest bank holding companies and whether such holdings might have affected the transparency of financial statements.