Sources on a Standard & Poor’s conference call this morning -- which was originally focused on FIN 46 and its impact on ABCP conduits -- believe the amendment to FAS 140, if true to the expected Exposure Draft, could be a greater challenge to the securitization markets than FIN 46. FIN 46 is the set of consolidation guidelines issued by the Financial Accounting Standards Board in January.

One of the main drivers of the FAS 140 amendment was to address the FIN 46 QSPE exemption, said project coordinator Ron Lott, who drafted FIN 46 and is also the project coordinator on the 140 Exposure Draft.

According to Marty Rosenblatt, who expressed his views on a “draft of the draft,” everything from Agency RMBS to credit card master trust structures could be seriously impacted by the amendment, which addresses the permitted activities of a QSPE.

“My initial reaction is that is will be a disaster for participants seeking off-balance sheet treatment,” Rosenblatt said.

Lott indicated the Exposure Draft would be posted on the FASB Web Site either later today or early tomorrow. Regardless, the deadline for commentary will be July 31. Following that deadline, FASB round tables are expected to follow. A final draft could be issued in the fourth quarter 2003, though implementation will probably be well into next year.

Full story to follow in next week’s issue (6/16).

 

 

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