The Securities and Exchange Commission is getting its ducks in a row to begin studying fair value, or “mark-to-market,” accounting as required by the federal bank bailout bill, the Emergency Economic Stabilization Act of 2008.

“We are in the process of assessing the requirements, developing plans, and dedicating resources to fulfill the mandate,” said SEC spokesman John Nester. The 90-day study will examine the effect of mark-to-market accounting on a financial institution’s balance sheet, on bank failures in 2008, and on the quality of financial information provided to investors. The study will also look at the process used by the Financial Accounting Standards Board to develop accounting standards.

Congress also told the SEC to include in its report any alternatives to the fair-value accounting methods outlined in Financial Accounting Standard No. 157 Fair Value Measurements along with any recommendation it might make to modify accounting standards around mark-to-market requirements.

In seeking federal aid to overcome the effects of seized credit markets, banks blamed fair value for their financial ails. Banks have criticized FAS 157 and its reliance on market pricing for establishing fair value because seized credit markets have caused market activity to evaporate. Banks and auditors have wrangled over the extent to which values should be based on aged transactions or modeling that takes into account the underlying value of toxic securities.

Although FASB operates under SEC authority, Nester noted the SEC doesn’t in the normal course of business conduct detailed studies of FASB’s standards or Generally Accepted Accounting Principles. SEC Chairman Christopher Cox assigned John Kroeker to lead the study. Kroeker is deputy chief accountant for accounting at the SEC, responsible for resolving accounting issues and rulemaking projects and overseeing private-sector accounting standard-setting activities.

The SEC is due to present its report to the U.S. Treasury and the Federal Reserve by Jan. 2.