Friday, July 25, 2008

FASB To Reconsider Timing On Proposed Changes To Securitization Rules

FASB announced in its weekly Action Alert yesterday (July 24) that at next week's FASB board meeting, it will “reconsider the effective date and transition provisions” for its upcoming proposals to amend the securitization standards (FIN 46R and FAS 140). Additionally, FASB will “consider transitional disclosures and the timing of both projects.”

Earlier today (July 25), Congressman Spencer Bachus, Ranking Member on the House Financial Services Committee, posted a press release noting he sent a letter to the chairmen of the SEC and FASB earlier this week, asking them to “extend the deadline for changes” to FASB’s upcoming revisions to FIN 46R and FAS 140 on securitizations “to allow for a full opportunity for all stakeholders to evaluate and comment on all policy alternatives and their consequences.”
Bachus’ July 22 letter to SEC and FASB notes, “While expeditious regulatory action has been beneficial in many areas, I am concerned that your current timeline to amend FASB Statement 140… and [FIN]46R… by the end of 2008 may have serious unintended consequences. Changes to securitization accounting could have a dramatic impact on the economy, the capital markets, and consumers seeking credit.” Bachus then asks that the effective date for the revisions to FASB’s securitization rules be no sooner than Jan. 1, 2010. “In the interim,” says Bachus, “the SEC and FASB should work with market participants to develop temporary solutions to improve market transparency and disclosures.” [In related news, see also our separate blog post today: “Cox, Geithner Tell Congress…” about yesterday’s House Financial Services hearing on Systemic Risk and the Financial Markets; accounting was one of the topics mentioned at the hearing.]

A joint letter was also recently sent to FASB by the American Securitization Forum (ASF) and the Securities Industry and Financial Markets Association (SIFMA) (see ASF-SIFMA July 16 letter) asking FASB to further delay the effective date of its proposed changes to the securitization rules beyond year–end 2008.

NOTE: FASB had already tentatively decided to give even more time for some of the proposed changes to the securization rules, such as those impacting existing QSPEs; ASF-SIFMA and Bachus are recommending more time for the proposed changes in their entirely.

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