Accounting for Financial Institutions Is a Mess

Before the financial crisis hit, the accounting rule makers were moving to impose more consistency by increasing the number of assets that will be valued at market values -- the only values that really matter if a bank needs to raise cash by selling an asset.

But the rule makers came under heavy pressure to back down, and they did. Now, says Ed Trott, a former member of the F.A.S.B., "we are moving back to the past" by increasing the ability of banks to massage their numbers as they wish.

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With the leeway to choose how to value assets comes the risk that investors may conclude they cannot trust the numbers.