The American Securitization Forum, in conjunction with the Bond Market Association, released a comment letter this morning outlining its criticism of the Financial Accounting Standards Board's Statement No. 140. Outlining the joint body's objections in seven subsections totaling almost 30 pages, the ASF/BMA states: "As a policy matter, we do not agree with FASB that any or all of these changes need to be made. Nor do we agree with the general pro-consolidation orientation reflected in the Exposure Draft. In addition, we have serious practical concerns about the manner in which FASB is seeking to achieve its two main goals."
The letter begins with the unintended consequences that could result should FAS 140 be implemented as is and a list of recommendations — including the deletion of paragraphs 9-11 of the exposure draft and "clarify and limit the scope of transactions that are subject (to the proposed) limitations."
The seemingly negative stance that FASB has taken on the Master Trust structure is also addressed, with the ASF/BMA asking that board define and the concept and materiality of reissuance, allowing for the market to debate, citing the vague wording used by FASB in differentiatin conduit and term structures. "[I]f the Exposure Draft is given its broadest reading, we doubt whether any current qualifying special-purpose entity would qualify under the proposed new standards," the ASF writes.
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