FASB Delays Rule That Affects Trillions in Bonds
The Financial Accounting Standards Board has delayed implementation of a rule (FAS 140) that could force issuers of securitized assets - including mortgages - to post more capital on bonds guaranteed and held off balance sheet.
FASB is now considering implementing the accounting change for any fiscal year that begins Nov. 15, 2009 as opposed to year-end 2008.
In a letter to FASB, Rep. Spencer Bachus, R-Ala., ranking minority member of the Financial Services Committee, said changes to securitization accounting potentially affects $10.5 trillion in securitized assets, including $7.2 trillion in mortgage-related securities.
Depending on the specifics of the rule, issuers might be forced to take billions of dollars in bonds back onto their balance sheets, which would force them to increase the amount of capital held to insulate against losses. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/