At last week's meeting, the Financial Accounting Standards Board seemed to favor not adding a requirement that a QSPE be used to achieve sale treatment in the transfer of "undivided interests" in financial assets, accounting sources said.
"They might even kill the term [undivided interests]," said Marty Rosenblatt of Deloitte & Touche, and accounting chair of the Asset Securitization Forum.
Separately, the board still intends to beef up the requirements of paragraph 9(a) to also address the "right of offset" issue that recently surfaced (see ASR 1/26).
"Some board members expect that requiring the passage of 9(a) would be a self-policing mechanism, but other board members expressed concern about the variety of opinions in legal opinions," Rosenblatt said.
The right of offset issue questions whether a bank regulator, or a borrower, can legally offset a borrower's deposit account in a banking institution that has entered into receivership, and how or if these rights are altered if the borrower's debt has been transferred to a QSPE.
Meanwhile, FASB announced in its Action Alert last week that several previous FIN 46 FSPs have been included in Appendix E of the current text of FIN 46R, until the effective date is passed. Additionally, FASB has reiterated three outstanding staff positions as FSP FIN 46(R)-1, FIN 46(R)-2 and FIN 46(R)-3, to replace the original 46-2, FIN 46-5 and FIN 46-8, respectively. See FASB.org for details.