Wells Fargo `Strongly' Opposes Accounting Board's New Rules on Loan Value

Wells Fargo & Co., the largest home lender in the U.S., said it disagrees with an accounting board’s plan that would require banks to report the fair value of loans on their books.

“We strongly oppose the expansion of fair value as the primary balance-sheet measurement attribute for virtually all financial instruments,” Wells Fargo Controller Richard Levy wrote in the Aug. 19 letter. “It will only serve to cement a short-term focus on fair-value measures.”

Wells Fargo is the first of the largest U.S. banks to publish its position among letter writers who named an affiliation, according to the Financial Accounting Standards Board website. The letter was written to officials at the board, which said in May that it may require banks to report the fair value and amortized cost of loans and some other financial instruments on their balance sheets.

Wells Fargo, based in San Francisco, said the proposal would lead investors to put more emphasis on short-term results, eroding support for the banking system. The lender also said the new rule would mean deriving values for illiquid instruments like loans from subjective “Level 3” valuations such as models.

The comment period is set to close at the end of September.

To contact the reporter on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

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