It's crunch time. This week, the House of Representatives will decide on a bill that will give the new systemic risk regulator the power to override the SEC's judgment in its oversight of the Financial Accounting Standards Boards. It would set up a "council" of interested parties to exercise its judgment over the SEC's.

According to Jessica Holzer of Dow Jones Newswires, the American Bankers Association, the Commercial Mortgage Securities Association, the Council of Federal Home Loan Banks, the Financial Services Roundtable, the National Multi Housing Council, the National Apartment Association, the National Association of Home Builders and the Real Estate Roundtable signed onto a letter to House Financial Services Chairman Barney Frank (D.-Mass.) and Rep. Spencer Bachus (R-Ala.) on Monday.

They like the idea:

"Since the SEC's mandate is too narrow to take into consideration potential systemic risk created by accounting standards, the Council should be able to review and make recommendations on any accounting principle or standard that it believes poses a systemic risk."

Read that again: "systemic risk created by accounting standards." This kind of thinking - really, a justification for the denial of facts - is about to be built into the governance of the the accounting standards. In the credit crisis, accounting standards reported the outcomes of systemic risk - they didn't create the systemic risk. This is an opportunity for those most culpable for the mess they to fob it off on the accounting. And they just might institutionalize it by legislature.

It's created some strange bedfellows, making the accounting vortex swirl even faster. I can't remember the last time that I've seen American Institute of Certified Public Accountants, the California Public Employees Retirement System, the CFA Institute, and the Council of Institutional Investors on the same side of an issue as the U.S. Chamber of Commerce. They're all on record as opposing the bill, same as the SEC and the FASB.

The bill is a travesty: it only provides another lever for the regulated to pull on their regulators when things don't go their way. Look at the composition of the proposed council: while the SEC would have a seat, it would never be able to dominate the council. Not with representation from the federal banking regulators, the Commodity Futures Trading Commission, the Federal Housing Finance Agency and the National Credit Union Administration at the same table.

You can do something, if you hurry: write to your Congressman copy it to Barney Frank.  The fax number to Barney Frank’s office is 202-225-0182. The House Financial Services Committee also has a link established for emails on the this page, which also suggests that letters be sent to the Member of Congress that represent their region. There is an email form on the website to contact representatives.  It is designed for communication from constituents within that state. If you need inspiration, try this form letter. Act now: time is running out.