In last week's redeliberations, the Financial Accounting Standards Board overturned a previous tentative ruling - a development that could bode well for the asset-backed commercial paper community, according to industry observers.

In the prior session, FASB had ruled that subordinated retained interest, including overcollateralization, would not be deemed as variable interests in an SPE. The Board subsequently reversed that stance.

"In a multi-seller conduit, the analysis of variable interests would include overcollateralization, guarantees and other forms of credit enhancement regardless of whether it applied to all, most or just some of the conduit's assets," said Deloitte & Touche's National Industry Director Marty Rosenblatt.

The significance of this, Rosenblatt said, needs to be evaluated against the developing provisions associated with the decision-making capacity of the SPE.

According to an "Accounting Alert" circulated by Ernst & Young concerning the redeliberations, "Under the previous decision (which the Board reaffirmed), an entity with decision-making is consolidated by the party (if any) who has both: A) The ability to make decisions, and B) Is entitled to the majority (may change to "substantial portion") of either the entity's risks or residual economics (rewards) through variable interests, which is a characteristic indicative of ownership."

Like the prior week, the FSPEs analysis, which was a bright light for certain kinds of securitizations, specifically those conducive to a risk-diversifying argument for exempting consolidation, looks like it will remain on butcher block.

Also significant last week, the board ruled to eliminate the term "market-based fee" from the final interpretation. The board moved the implementation date for existing structures back to June 15, 2003. FASB meets again this Wednesday.

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