The nation's financial crisis, and its downward effect on the value of private-label mortgage-backed securities, has suddenly thrust an obscure accounting issue into the spotlight.

The emerging "OTTI" debate revolves around the rule currently requiring banks to value their MBS investments at far less than what they are worth. That's because if the holdings are deemed "other than temporarily impaired," they must be written down to their current market value. Unfortunately, the current market stinks. In fact, it's practically nonexistent. So while anticipated credit losses are much smaller, the mark-to-market values make things look far worse than they are.

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