CMOs Exempted From FASB Standard

The Financial Accounting Standards Board has voted six-to-one to exempt regular collateralized mortgage obligations, on a preliminary basis, from Financial Accounting Standard 155, according to an RBS Greenwich Capital report."This is good news for the liquidity of the CMO market, as well as other 'prepayable' securitized products such as auto ABS," said Alec Crawford, a mortgage strategist at RBS Greenwich Capital. The decision is "positive" and "critical for the mortgage markets," as it addresses "what appears to be an inadvertent accounting charge for certain asset-backed securities," said Charlie Gilman, the American Bankers Association's accounting policy adviser. "That said, we are reviewing the problem to determine how much of the problem it alleviates."