With the implementation of the Emerging issues task force (EITF) 03-1 (The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments) opening financial institutions to increased earnings volatility, the Financial Accounting Standards Board (FASB) met last Wednesday and decided to delay the implementation of the portion of the guidance relating to the impairment or price declines on debt securities resulting from rising interest rates. Specifically, the board decided to postpone the effective date for the implementation of paragraph 16 of the guidance as it applies to available-for-sale (AFS) debt securities that are underwater solely because of an increase in interest rates.

As a result of the meeting, two proposed FASB Staff Positions (FSP) would be released for comment this week. The first will contain implementation guidance regarding securities falling under paragraph 16 of EITF 03-1. This is subject to a 45-day comment period and would be effective on the last reporting date for reporting periods (depending on each company's year-end) that end after the final FSP is posted on FASB's Web site. The second FSP indefinitely postpones the effective date for guidance in paragraph 16 until the first FSP is finalized. This is subject to a 15-day comment period.

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