FASB Modifies MTM!
FASB met this morning as Bloomberg reported in FASB Eases Fair-Value Rules Amid Lawmaker Pressure. Of interest is the new OTTI guidance added a provision that would allow financial institutons that previously recorded an OTTI charge to reclassify the non-credit portion of the charge from retained interest to other comprehensive income. This directly increases Tier 1 Capital. This was not in the FSP but we asked for it in our comment letter along with many others.
For example, the FHLB Atlanta which took a 87 million dollar charge for a 44,000 credit loss will now be able to reclassify 86.56 million into capital (unless credit losses have increased since then).
