Regulatory Watch: Senator Gramm Emerges as Key Player in Mortgage Policy Debates.

Senator Phil Gramm of Texas, chairman of the Senate Banking Committee, is asserting himself as a key voice on policy issues of interest to mortgage lenders.

For instance, Senator Gramm has been outspoken player in debates about accounting for mergers and acquisitions that will affect the mortgage industry and oversight of the secondary market agencies, Fannie Mae and Freddie Mac.

The Financial Accounting Standards Board has voted to go ahead and eliminate the use of the pooling- of-interests method of accounting.

While used in a minority of cases overall, many banks, thrifts and mortgage companies like to use the pooling method in their transactions.

In the face of opposition in Congress and by the banking industry, FASB had pulled back from implementing its new rule to reassess its decision. Now that FASB will be changing the accounting for purchased goodwill, it has elected to go ahead and develop a final statement that will leave purchase accounting as the only method for business mergers and acquisitions.

Reaction to the decision was mixed. Sen. Phil Gramm, R.-Texas, said FASB's move "underscores the importance of a good working relationship between Congress and FASB.

"While the board made its own decision, its members clearly heard the concerns and ideas that were expressed in our Banking Committee hearings and took them to heart.