The Financial Accounting Standards Board broke the logjam over valuation of securities when it agreed unanimously last week to permit reporting at amortized cost only for those securities "that management has the intent and ability to hold to maturity."

That clearly doesn't include most mortgage-backed derivatives, according to Robert C. Wilkins, FASB project manager. "Securities that could be sold in response to change in interest rates, changes in prepayments, increases in loan demand or other similar factors would not be considered as held-for-investment under this approach," he said.

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