The Financial Accounting Standards Board is exploring fair market valuation for both retained and purchased beneficial interests in securitizations. The notion was discussed in last week's session on the application of FAS 133 to securitizations.

Under the current interim guidance issued in 2000 (FAS 133 D1), beneficial interests with substantial prepayment risk must be accounted for as either available-for-sale or trading in accordance with paragraph 14 of FAS 140. Beneficial interests in a securitization not subject to substantial prepayment risk are accounted for under Statement 115 as held-to-maturity, available-for-sale or trading.

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