The Great Recession

Question :
Back in 2008 during the financial crises, several governments around the world were blaming accountants for the crash. Their logic was that the accounting standards were too strict, especially for banks, and those standards were helping to cause the spiral downwards in the stock markets and thus in the world economy. Specifically, the governments wanted the accounting standards boards (specifically FASB and IASB) to relax the standard under which accounting for investments required banks and other companies to take write downs on their investments when the fair value of the investments declined compared to the book value on the balance sheets of the investors. This standard (the one you have been studying) required reductions to the balance sheet and in some cases to the income statement (if the entity were using either the FV method or the FV-NI method of accounting). The banks and other companies were then required to reduce the assets on their balance sheet. The governments were contending that this had a spiral affect where the reduction of the balance sheet of the investor reduced its value and thus its stock price which then caused further write-downs and slowed the world economy. For example, if Bank of America held investments in General Motors, then when GM went into bankruptcy, BofA must have to write down its investment to fair value (i.e. virtually nothing). This caused the balance sheet of BofA to decline and thus anyone who was an investor in BofA would also have to take a reduction to their balance sheet, and so on down the line. The governments wanted a repeal of the fair value standard arguing that it was causing the financial crises to continue to worsen. FASB and IASB stood firm and did not relax the standard. Comment on whether you think FASB or IASB should have relaxed the standard. Also comment on whether the government's argument is logical and why you feel the way you do. In your comments, answer the question "were accountants the cause of the Great Recession of 2008?"