The Financial Accounting Standards Board added three more comment letters to its Web site this morning. In addition to the joint ASF/BMA letter summed up here yesterday, FASB posted comments from Morgan Stanley and Fleet.

As did the ASF/BMA letter (which was received by FASB this morning), Morgan Stanley and Fleet raise significant concerns about the practicality of the Exposure Draft, and warn of the detrimental effects to the securitization markets should FAS 140 be amended as proposed.

"We are concerned that the Exposure Draft, if issued, will result in less efficient markets for the securitization of financial assets," writes David Moser, principal accounting officer at Morgan Stanley. "Although it is unclear in a number of respects, we are concerned that the requirements in the Exposure Draft may prevent altogether the securitization of credit card receivables or any revolving loans."

At four pages, Fleet's submission is notably muted in tone, language and length, compared to Morgan Stanley and the ASF/BMA, which submitted 14 and 27 pages, respectively.

Fleet also seems particularly concerned with the impact on revolving trusts, and believes that Master Trusts, when new issuances are not used for the repayment of existing beneficial interests, should not be included in the scope of FASB's take against re-issuance. Also, Fleet recommends that "a grandfathered QSPE be permitted to accept transfers of assets which do not result in the issuance of new beneficial interests." The bank warns of a wave of early amortizations that would result if such a provision is not included.

Morgan Stanley, which aligns itself with the ASF and BMA as a member of both groups and a contributor to their letter, takes issue with the fundamental premise of the Board's approach, which is to "equate the risk-and-rewards of certain types of involvement with an SPE as evidence of control."

Morgan also takes issue with -- or rather would like to take issue with -- the Board's objectives, but states that "Unfortunately, because the Exposure Draft fails to include any basis for conclusions for several of the proposed requirements as they affect these transactions, we do not have the benefit of understanding the Board's objectives." 

These positions are, at moments, in stark contrast to Senator Levin's laudatory comments submitted to and posted by FASB a few weeks back (see ASR 7/21).

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