Banks and other financial institutions no longer have to worry about collateralized mortgage obligations in their held-to-maturity portfolios. The industry was finally given the go-ahead to place the instruments in that category by the Federal Financial Institutions Examination Council and FASBs Emerging Issues Task Force after an arduous nine-month debate.

The decision was finally put to rest during an EITF meeting July 21 when the regulatory body presented a letter of clarification on its Supervisory Policy Statement on Securities Activities to the task force. EITF members agreed the letter adequately addressed the concerns about whether CMOs meet the definition of held-to-maturity under FAS 115, Accounting for Certain Investments in Debt and Equity Securities.

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