But first, accountants embarrass themselves

This is so incredible, so bizarre that I have to blog.

The FASB has lost its mind. It is proposing that:

U.S. companies would be allowed to report net-income figures that ignore severe, long-term price declines in securities they own. Not just debt securities, mind you, but even common stocks

(Quotation from an excellent Bloomberg article by Jonathan Weil. This is a large, forceful slap in the face to the users of financial statements. As Weil says:

if these rules had been in place last year, a company that still owned shares of American International Group Inc. or Fannie Mae, for instance, could exclude those stocks’ price declines from net income entirely. It would make no difference that the companies were seized by the government last year, or that both are penny stocks.

Idiocy on this scale is deeply depressing. One can only hope that this proposal goes nowhere.