Subject: File No. 4-573
From: Colin J Haslam, Professor
Affiliation: Professor and Director Centre for Reserahc in Finance and Accounting

February 13, 2009

The research group that I direct "The Centre for Research in Finance and Accounting" at the University of Hertfordshire, England has been conducting research into the impact of fair value reporting on the US corporate sector generally and also the banks.

Our argument is that fair value reporting forces firms to absorb market value into their balance sheets. Often inflating rates of balance sheet capitalisation ahead of cash earnings and amplifying value at risk. In addition because balance sheet valuation is increasingly referenced to market value(s) this magnifies the need for corporate restructuring and downsizing when holding losses and goodwill impairments charged into income statements.

We have attached our paper "When it comes to the crunch: what are the drivers of the current US banking crisis" which we hope readers may find of interest. This paper questions the viability of the current banking business model and its capacity to withstand mark to market risk adjustment arising from the risk embedded in bank assets.

Professor Colin Haslam