Accounting rule-makers have proposed allowing companies to use more leeway in valuing their assets under "mark-to-market" accounting, a move that could ease balance-sheet pressures many companies say they are feeling during the economic crisis.

The Financial Accounting Standards Board agreed Monday on proposed guidance that would make it easier for companies to use their own models, estimates and judgment in determining the "fair value" of their assets.

Mark-to-market accounting requires companies to peg the value of their assets to the ups and downs of the market. But many companies have complained that the current rules haven't worked during the financial crisis, which has distorted or frozen many markets. The result has been big asset write-downs that have weakened their balance sheets.

The new proposal clarifies and modifies when companies can find that trading in an asset has occurred in an inactive market and under distressed circumstances - an approach that FASB says will require companies to exercise "significant judgment."

If companies find that to be the case, they can then use their own valuation techniques in pricing the asset, instead of relying on what they contend are market prices that are temporarily weighed down and unnaturally low.

"The goal is to give more operational guidance" for using mark-to-market rules, said Neal McGarity, an FASB spokesman.

The news helped prop up shares of financial companies with distressed balance sheets for another day, which had been helped over the last week by chatter over possible changes to mark-to-market rules. Among the best performing stocks in Monday's session were some of the larger banking names with Citigroup Inc. (C) adding 31% to 2.33 and Bank of America Corp. (BAC) rising 7.3% to 6.18

But while the FASB's action was welcomed by some investors, "it doesn't go far enough," said Donna Fisher, senior vice president of tax accounting and financial management at the American Bankers Association.

Fisher said until guidelines address temporary impairment charges, "you still have an inaccurate picture of capital. The problem is that companies will be recording losses that are much greater than the losses they will incur."

Still, other observers are concerned that allowing more flexibility under the rules will result in inflated asset values on balance sheets and less transparency for investors about companies' true financial status.

Wayne Landsman, an accounting professor at the University of North Carolina, said while there was nothing inherently wrong with the steps the FASB is proposing, he worries it will give companies too much latitude to value assets the way they want instead of how they should be valued.

Companies "don't want to write the assets down to a number what the markets are telling you they're worth," Landsman said.

FASB's proposal comes on the heels of a House subcommittee hearing last week in which members of Congress blasted FASB and regulators for not acting more quickly to issue guidance to ease the application of mark-to-market rules. FASB Chairman Robert Herz had promised at the hearing that final guidance would be issued within weeks.

FASB plans a final vote on the proposal April 2, after a 15-day public comment period. If enacted as planned, companies could use the new guidance when issuing their first-quarter financial statements.

-Michael Rapoport, Dow Jones Newswires; 201-938-5976; michael.rapoport@dowjones.com

(Kejal Vyas contributed to this report.)