A VIE is that in which the total equity investment is less than the expected loss, as described by Jim Mountain of Deloitte & Touche.

As the rules are written, if the entity is deemed a VIE, any one party that holds the majority of the expected loss will consolidate. If no one party holds the majority of the expected loss, than the party that holds the majority of the expected residual return will consolidate. If no party owns the majority of either the EL or the ERR, no one consolidates.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.