Both of these proposals raise a number of concerns for me: •  From the standpoint of relevance and reliability, the FASB and IASB approaches would not accurately reflect the traditional commercial banking model. Indeed, the imbedded incentives would actually favor "originate to distribute" rather than "originate and hold" lending models. •  Second, we have very little actual experience in fair valuing liabilities.
Using fair value for liabilities introduces a new set of incentives and risk exposures for management. •  Thirdly, no market currently exists for non-government-guaranteed, small business loans. The lack of fair value information for these types of loans could actually discourage small business lending.