November 10, 2011 / 4:01 AM / 8 years ago

Goldman, Morgan Stanley mull reducing mark-to-market accounting - WSJ

Nov 9 (Reuters) - Goldman Sachs Group Inc and Morgan Stanley are discussing whether to reduce their use of mark-to-market accounting, in which companies immediately take profits or losses as asset values fluctuate, the Wall Street Journal said.

If they go through with their move, both Goldman and Morgan Stanley would increase their use of historical cost accounting, where assets generally are held at their original value or purchase price, the report said citing people familiar with the situation.

Any shift away from mark-to-market accounting would affect just a slice of the $1.7 trillion in combined assets at Goldman and Morgan Stanley.

An accounting change could affect a portion of Goldman’s $20.05 billion in investment-grade loan commitments as of Sept. 30, as well as some of the $55.1 billion in commitments by Morgan Stanley, the paper said.

A decision by Goldman and Morgan Stanley officials is not imminent and there are wide differences of opinion among executives, according to WSJ.

Regulatory approval is not required for such a move, the newspaper said.

Goldman and Morgan Stanley converted themselves to bank-holding companies in 2008 at the height of the financial crisis, giving them access to emergency funds from the Federal Reserve’s discount window.

Goldman Sachs and Morgan Stanley could not immediately be reached by Reuters for comment outside regular U.S. business hours.

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