The top financial official at Bank of America on Thursday defended a method of accounting known as "fair value accounting," despite the fact that this system has come under fire lately in the wake of the recent credit crisis.
Speaking at a conference held by the Federal Reserve Bank of Chicago, Bank of America Chief Financial Officer Joe Price said he believed that the fair-value method of accounting makes risk "more transparent."
Price admitted that the fair-value method can be re-examined and improved, but said that it is important for risk control of "market-sensitive businesses."
The Bank of America CFO stated that the credit crunch has brought to light areas of risk that were underestimated, as he said, "either in size or severity."
However, Price concluded, "We would assert that changing the applicable accounting system will not address the more fundamental question related to risk assessment."
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