As you asking Information the Fair Value Option Portfolio of the Bank of America the Information is given below
About the Fair Value Option

FASB has approved an accounting change, Fair Value Option (FASB 159), which allows banks the option to mark certain financial assets and liabilities to market, with changes in fair value recognized in earnings. This allows banks to hold and hedge excess concentrations while eliminating some of the accounting asymmetry

Highlights of FVO

¾ Option to adopt either on January 1, 2007 or January 1, 2008.
¾ Adoption of FVO is linked to the adoption of a Fair Value Measurement (FVM) program. FVM requires detailed
disclosure of the valuation approach for all market-based instruments on three levels.
¾ A one-time election to move existing assets to a MTM valuation is available at adoption of FVO, with any cumulative
unrealized gains and losses on existing contracts recorded as an adjustment to retained earnings.
¾ Implementation is prospective and will not require financial restatements for prior periods.
¾ Irrevocable FVO election must be made at the origination of new assets, with the associated mark impacting current P&L.

Portfolio Scope / Selection
A formulaic approach for portfolio selection, for both existing and new transactions, is used. Created by private side Risk Management personnel, the formula is not shared with public side associates.
¾ Day 1 FVO portfolio selection from existing (prior to 12/31/06) client commitments.
¾ Ongoing FVO portfolio selection from new commitments.
¾ Limited to borrowers with a liquid CDS or bond market – i.e., public entities or private entities with publicly traded debt.
¾ Borrowers deemed to have “concentrated exposures” – i.e, in excess of “house guidelines”.

¾ Facilities limited to entire contracts of Revolvers, Term Loans and Letters of Credit. ¾ Breadth of borrowers and facilities may increase over time

Attached Files

FVO Bank Of America.pdf (142.5 KB, 50 views)