FASB Ignored Bankers' Advice In Formulating Derivatives Rule

To the Editor:

The Jan. 8 article "Debate Rages on Derivatives Plan by FASB" struck a familiar chord. After serving on the Financial Accounting Standards Advisory Council for four years, I became very familiar with the derivatives issue.

My impression was that except for the academic and FASB members, all of the industry and bank representatives presented the seemingly logical viewpoint that to require market or fair-value accounting for short-term hedges would obviate the very risk-averse strategy for which the hedge was designed. In ignoring all of the evidence presented the board has proven that they suffer from an SEC-induced myopia.

Robert F. Muth

President and CEOAndover BancorpAndover, Ohio