Earlier today the American Securitization Forum, in conjunction with the Bond Market Association, submitted its joint comment letter to the Financial Accounting Standards Board concerning the Board’s proposed amendment to FAS 140.
According to the two industry groups, FASB’s amendment to 140 has two main goals: to further restrict the kinds of support that transferors and their affiliates and agents can provide to QSPEs, and to prevent certain entities that can reissue beneficial interests from operating as QSPEs in response to the adoption of FIN 46.
"As a policy matter, we do not agree with FASB that any or all of these changes need to be made,” the two industry groups write. “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 27-page letter begins with the unintended consequences that could result should FAS 140 be amended as proposed, including the damage that could be done to vanilla Agency MBS structures as well as revolving master trusts.
"[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.
To view the comment letter in its entirety, click here.