The Wall Street Journal reported (http://online.wsj.com/article/SB123867739560682309.html) that on April 2 the FASB eased mark-to-market accounting rules that might adversely affect the book values of some collateralized debt securities, including mortgage securities, on the books of banks and other investors.  Congress pushed hard for the FASB to do this, hoping it would improve capitalizations of banks and reduce losses at other companies holding devalued debt securities ("toxic" assets) by allowing them to reduce previous writeoffs or to avoid some additional writeoffs.  Some critics, mainly stock and bond investors, think it will make accountings by the companies less transparent or definitive.  Other critics think it might reduce the possible success of the forthcoming Public-Private Investment Partnership (PPIP) recently announced by Secretary of the Treasury Tim Geithner, who hopes it will help get "toxic" assets off the books of the big banks, including Citigroup, Bank of America, Wells Fargo and PNC Bank.

We think that on balance this step alone will help thaw the lending paralysis at some large banks by improving their regulatory capital, and possibly by improving market values and market liquidity of the toxic securities.  Ahead of the ruling, on March 25 The New York Post reported that according to bond traders (http://www.nypost.com/seven/03252009/business/double_dippers_161157.htm) that Citigroup and Bank of America were recently outbidding the market for large volumes of AAA-rated mortgage securities at about 30 cents on the dollar, so it appears the big banks agree with us, although we question the propriety of those companies using TARP funds to buy securities that the government will be using additional tax money to help get them off their books.