FASB Consolidation Rule Will Have Impact

Federal regulators expect banks and thrifts to move certain mortgage securitizations onto their balance sheets due to new accounting rules and are seeking comment on the impact it will have on capital ratios. The new Financial Accounting Standard Board rules go into effect in January. Request for comment was published in Tuesday's Federal Register and is a short 30 days. Institutions have until October 15 to respond and convince regulators that they need capital relief. The request for comments asks whether a phase-in of risk-based capital requirements over four quarters is needed. Federal Reserve Board chief accountant Arthur Lindo told certified public accountants at their annual banking conference that certain private-label mortgage backed securities are "likely to come on board." And securitizations where the servicing bank has residual interests are likely to be consolidated under Financial Accounting Standards 166 and 167.