Banks, including Bank of America and JP Morgan Chase, are opposing a derivatives accounting proposal that could inflate their balance sheets, Reuters reports. The draft rules, introduced by the Financial Accounting Standards Board in January, will require banks to report their full exposure for most derivatives on their balance sheets, instead of net amounts. The proposed rule, which passed by a three-two vote, may require S&P 500 companies to bring nearly $7 trillion in derivatives onto their balance sheets if no netting is allowed. Nearly 97% of that will come from five big banks, including, Citigroup, Goldman Sachs and Morgan Stanley. The proposal may make it hard to net derivatives traded on clearinghouses.

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