SEC Backs Changes to Banks' Debt-Level Reports

Federal regulators have voted to propose new rules that could make it harder for financial firms to disguise their level of debt.

Members of the Securities and Exchange Commission are proposing expanded disclosure requirements for banks' practice of temporarily trimming their debt at the end of quarters to make their financial statements appear stronger. The practice is legal but regulators say it can give investors a distorted picture of a bank's debt and level of risk.

The SEC proposal would require financial firms to report detailed information on their short-term borrowing every quarter. Firms currently are required to disclose that borrowing only once a year.