Among the many disasters lurking behind the scenes of the U.S. economy is that of pensions and other post-retirement benefits. It has been estimated that in 2005 there were $472 billion of unrecorded obligations for pension and other post-retirement benefit plans, and that the after-tax effect of these obligations would reduce shareholders' equity by $248 billion or more.Perhaps to give the Senate Committee on Banking, Housing and Urban Affairs an inkling of hope, Financial Accounting Standards Board Chairman Robert Herz and International Accounting Standards Board Chairman Sir David Tweedie presented their plans to require the underlying economic effects of post-retirement plans to be more faithfully and transparently reported through better accounting practices.

Committee chairman Richard C. Shelby, R-Ala., expressed clear support for the project and the independent judgment of both boards. "Sound and transparent accounting standards are the lifeblood of the capital markets," Shelby said in his introductory remarks. "Financial reporting must reflect economic reality. If it does not, investors will lose confidence in the integrity of our markets. It is that simple."

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