Sponsor banks who maintain asset-backed commercial paper Web sites as subsidiary or linked sites to their main homepage may unknowingly be at risk of losing the benefits associated with running a separate ABCP conduit, according to panelists at Strategic Research Institute's ABS on the Web conference, held in New York last week.

Through these site linkages, it is easy to tell that a sponsor bank is involved with a certain conduit, which may prove to be a problem with the implementation of FAS 140 provisions on consolidation with respect to qualified special purpose entities (QSPEs).

"The more there's an appearance that the bank controls the affairs of its ABCP conduit, the more you can make a case for consolidating the conduit with the bank," said Sam Pilcer, a managing director at Moody's Investors Service. "With consolidation, the whole accounting benefit of the bank having an ABCP conduit would be defeated."

Under FAS 140, set to go into effect on April 1, non-consolidation only applies to the extent that the transferee is a QSPE. However, some ABCP conduits may not be considered as QSPEs under FAS 140

"There is certainly some question as to whether all different types of commercial paper vehicles especially multi-seller asset-backed commercial paper vehicles, are qualified to be QSPEs," said Jason Kravitt, a partner at Mayer Brown & Platt. "The new proposed standard has a special proposed rule for special purpose vehicles that are not QSPEs, if that is ultimately adopted, sponsors of multi-seller commercial paper vehicles need to determine how they would do under that new standard."

And in determining whether a sponsor has control over a particular ABCP conduit, having the conduit's web page as part of the sponsor's Internet site may become a factor. "It's not determinative or material, but its not on the positive column," said Kravitt.

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