Sept. 30 (Bloomberg) -- The U.S. Securities and Exchange Commission probably will resist calls to suspend the fair-value accounting rules that some members of Congress blame for exacerbating the global financial crisis, people familiar with the matter said.

The SEC and Financial Accounting Standards Board today issued ``clarifications'' on how banks should interpret existing rules requiring them to review assets each quarter and report losses if values decline. A moratorium isn't being considered, said the people, who declined to be identified because the plan hasn't been completed.

Congressmen, banking lobbyists and companies including American International Group Inc. have urged the SEC to suspend fair-value accounting, saying it forces firms to report losses they never expect to incur. Federal Reserve Chairman Ben S. Bernanke and other proponents say removing the rule would erode confidence that firms are owning up to losses.

``In the past couple of weeks, fair-value accounting has been under attack,'' JPMorgan Chase & Co. analyst Dane Mott wrote in a report today. ``Blaming fair-value accounting for the credit crisis is a lot like going to a doctor for a diagnosis and then blaming him for telling you that you are sick.''

SEC spokesman John Nester declined to comment. FASB spokesman Neal McGarity didn't return a phone call seeking comment.

House Rejection

Representative Todd Tiahrt, a Kansas Republican, said the House probably would have approved a $700 billion bailout of financial companies yesterday had the legislation included a suspension of fair-value accounting. The House rejected the measure 228-205.

It would have passed ``easily'' if the rules had been suspended, Tiahrt, who opposed the legislation, said today in a Bloomberg Television interview.

Bernanke said in Sept. 23 testimony before the Senate Banking Committee that if regulators repeal the rules, ``nobody knows what the true mark-to-market price is.''

Fair-value rules require companies to determine how much assets are worth based on what they could expect to sell them for on the open market.

``Suspending the mark-to-market prices is the most irresponsible thing to do,'' said Diane Garnick, who helps oversee more than $500 billion as an investment strategist at Invesco Ltd. in New York. ``Accounting does not make corporate earnings or balance sheets more volatile. Accounting just increases the transparency of volatility in earnings.''

`Unrealistic Prices'

Anne Canfield, executive vice president of the Consumer Mortgage Coalition, counters that businesses have been forced to ``mark down their assets to unrealistic fire-sale prices,'' because trading has dried up. Canfield, whose group represents mortgage lenders, urged the SEC to suspend fair-value rules ``immediately'' in a Sept. 29 letter to the agency.

The SEC and FASB, in today's statement, encouraged companies to rely more on their own judgments, such as expected cash flows, in determining the current value of assets that aren't trading. The regulators also said price quotes provided by brokers when markets are frozen may not be the most reliable way to determine how much securities are worth.

Norwalk, Connecticut-based FASB, which writes U.S. accounting rules, is preparing ``additional interpretive guidance on fair-value measurements'' to be released this week, the SEC said. FASB will discuss fair-value accounting at its board meeting tomorrow.

Bankers Association

The American Bankers Association, a trade group representing lenders that has lobbied the SEC over fair-value accounting, praised the agency's clarifications, saying they will ``help auditors more accurately price assets,'' according to a statement released today.

The collapse of the subprime-mortgage market has contributed to more than $500 billion of losses and writedowns at global financial companies. Treasury Secretary Henry Paulson is seeking authority from Congress to ease the crisis by buying mortgage-securities and other assets from banks.

U.S. Senate leaders and President George W. Bush vowed today to revive the $700 billion financial-rescue plan after the House rejected the legislation yesterday.

To contact the reporter on this story: Jesse Westbrook in Washington at jwestbrook1@bloomberg.net.

Last Updated: September 30, 2008 19:10 EDT