FAS 157 defined the fair value of an asset as the price that would be received by the holder of that asset in an orderly transaction. On September 30, 2008, SEC and FASB issued a joint clarification which stressed that fair market value is not the price that would be received in distressed sale or forced liquidation. They also provide guidance that estimates of fair value can be made using the expected cash flow of such assets, provided the estimates has also reflects the adjustment of a willing buyer in the risk of default. This concept created transparency on the value of the assets which was easily confirmed by the auditors and users of the financial statements. However, during the recent economic crisis, this concept has created havoc on the balance sheets of some major financial companies. These financial companies were forced to write down assets in which the market has dried up and made it hard for them to value these financial assets. Since these financial assets were also used as a requirement for the liquidity ratio of some financial institutions, the write down of these financial assets caused the ratio to fall and trigger some margin calls. Many financial institutions decided to horde cash in order to preserve their ratio which caused the credit market to dry up. Most bankers argued the requirement of fair value accounting unfairly punished financial companies and caused their ratio to fall. Thus, they were lobbying the governments to ease up on fair value accounting and try to establish ways to determine the value of the written down assets they are holding to reflect the ‘true’ value. On early March 2009, U.S House of Representatives Financial services subcommittee on Capital markets, Insurance and Government sponsored entities called Robert H. Herz , the chairman of FASB, to testify regarding the use of fair value accounting. Due to the pressure of legislators, FASB eased up the mark to market rules on April 2nd, 2009, after 15 days public comment period. On April 9, 2009, FASB further issued an official update to FAS 157 which eases mark to market rules when market is unsteady or inactive. The leeway and the official update of FAS 157 have created controversy among the pro and contra opponents of fair value accounting. Many bankers have pointed out the use of ‘mark to market’ in distressed market lead to unreasonable write down of their financial assets. Robert Rubin , the former citigroup senior counselor was quoted saying that the rule has done “a great deal of damage”. William Isaac, former chairman of FDIC, has called fair value as the ‘major cause’ of the credit crisis. Spencer Bachus, the ranking republican on the house financial services committee pointed out the rigid application of fair value accounting had caused further instability in the banking system. The proponent of fair value accounting argued the notion that fair value accounting is the cause of the crisis. Arthur Levitt , former SEC chairman, pointed out that fair value accounting provided the kind of transparency essential to restore public confidence in US market. In his testimony, Robert H. Herz resisted the call from congress to revise fair value accounting. He called the ease up of mark to market rules will made way to mark to management rules of determining the financial assets value. Others have pointed out why financial institutions called for the revise of fair value accounting during this crisis, they obviously did not call for the revise during the upward movement of the market prior to the crisis in which fair value accounting has given them the appreciated value of their assets. The proponents of fair value accounting also concerned about FASB succumbing to political pressures. This incident had hurt FASB credibility. Robert H. Herz pointed out while bending the rules might seem beneficial in the short term, in the long run, a biased accounting standard will be harmful for all the users of financial reports.