Bowing to pressure from Congress and industry groups, the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) have issued a last-minute clarification that will allow companies to use expected cash flows to value illiquid mortgage assets in preparing their third-quarter financial reports.

The two accounting bodies stopped short of suspending a fair-value accounting rule (Financial Accounting Standard 157) that some of members of Congress are trying to kill as part of a $700 billion financial stabilization bill.

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