Despite widespread objections from securities professionals, the Financial Accounting Standards Board (FASB) is expected to approve a set of policies that would, in most cases, require financial institutions to link the initial transfer of a security and the subsequent repo financing for accounting purposes.

For the ABS industry, the policies would affect the way that dealers and their investor clients book the transactions. In the ABS market, dealers commonly sell an ABS or MBS and loan funds to investors to pay for the security. That dealer can account for the loan as an asset, which can be repaid after the repo settles and the investor claims the security, an accounting expert said.

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