In response to the Accounting Reform and Investor Protection Act being signed into law July 30, law firm Thacher, Proffitt & Wood issued a response noting that the impact of the legal changes is uncertain to benign but a pair of studies may lead to some changes within the industry.

The immediate legal changes - Exchange Act Reporting and Disclosure of Balance-Sheet Transactions - are not seen drastically changing the operations of most ABS issuers in the near term. In particular, the Exchange Reporting Act poses little threat to issuers, while it is too early to tell the effect of the new regulations regarding disclosure of off-balance-sheet transactions, TPW states.

The impact of the new law requiring companies to disclose all off-balance-sheet transactions is murky at this point, as it is too early to theorize how this will be accomplished. "It is difficult to predict what areas will be highlighted and how this will be accomplished," according to the study.

But, trouble may lie ahead with the SEC scheduled to issue two reports to Congress and the President in the coming year. Section 401(c), due next December, calls for a far-reaching study concerning off-balance-sheet activity. Section 702 calls for a close examination of the rating agencies, in search of any conflicts of interest in the ratings process that inhibit transparency.

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