SVB Collapse Reinvigorates Bank Accounting Debate

Law360, 2023

The collapse of Silicon Valley Bank (SVB) sent shockwaves through the banking industry and reignited a decades-old debate about whether fair value or amortized cost accounting is most appropriate for banks' financial reporting. Could one measurement regime or the other have provided market participants a better understanding of SVB's financial condition prior to its failure?

In an article published in Law360, Analysis Group Managing Principal Mark Howrey and Vice President John Drum examine the debate about current accounting guidelines for recording the value of securities. The authors give a brief overview of the relevant principles that govern accounting for debt securities and discuss the controversies that have followed this accounting in the context of historical events, including SVB’s breakdown and the 2008 financial crisis.

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Cameron S, Drum J, Howrey M