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IBAA OPPOSES FAIR (MARKET) VALUE ACCOUNTING

 WASHINGTON, Dec. 18 /PRNewswire/ -- The Independent Bankers Association of America (IBAA) today strongly opposed the Financial Accounting Standards Board's (FASB) Exposure Draft, "Accounting for Certain Investments in Debt and Equity Securities."
 Robert F. Muth, president and CEO of Andover Bank in Andover, Ohio, testified before the FASB on behalf of IBAA member banks. Muth serves on the IBAA Bank Operations Accounting Subcommittee and was recently appointed to the Financial Accounting Standards Advisory Council as the community bank representative.
 FASB's proposal would implement fair or market value accounting for the investment portfolio. The IBAA believes the proposed statement will lead to confusing, misleading and fluctuating financial statements; prevent bankers from responding to changing economic conditions; impair a bank's ability to meet its community's credit needs; and subject banks to additional regulatory scrutiny.
 "It will also impair the ability of small municipalities to raise much-needed funding," Muth said. "Ultimately, it may impair the ability of banks to lend, extend the credit crunch and impede the country's ability to stimulate economic growth and job creation."
 The proposed statement establishes three investment categories: available for sale, trading and held to maturity.
 Community banks have a special purpose of serving their local communities. Their business is focused on the monetary needs of their communities, and they expand or contract assets to meet local demand. Holding investment securities is an important source of liquidity.
 Although IBAA views the available for sale category as somewhat ambiguous, it believes the FASB would classify most investments held by community banks in this category. Classifying all or most securities in this category potentially creates significant problems for banks due to regulatory capital requirements.
 "We believe that community banks already are sufficiently regulated and examined in the area of investment management," Muth said, "and this function should remain with regulators, rather than be assumed by the FASB."
 Muth strongly urged that, if the FASB must proceed with the proposed statement, it should adopt several changes that would address bankers' and regulators' concerns.
 The IBAA is the only national trade association which exclusively represents the interests of the nation's community banks.
 -0- 12/18/92
 /CONTACT: Ann Grochala or Viveca Ware of the Independent Bankers Association of America, 202-659-8111/


CO: Independent Bankers Association of America ST: District of Columbia IN: FIN SU:

MH -- DC012 -- 8158 12/18/92 11:11 EST
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Date:Dec 18, 1992
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