WASHINGTON, D.C-- Kieran P. Quinn, CMB, Chairman of the Mortgage Bankers Association, has commented on the decision by the Financial Accounting Standards Board (FASB) to delay, by one year, implementation of a forthcoming proposal that would bring sweeping changes to securitization accounting.
The amendments to FAS 140 call for banks and finance companies that currently do not consolidate the issuing entities used in securitizations, commonly referred to as qualified special purpose entities (QSPE), to consolidate some or all of those entities. The affected transactions may include mortgage, credit card, student and retail auto loans.Quinn issued the following statement:
"While we continue to have grave concerns about the proposed changes to FAS 140, we do appreciate the extended time from FASB to allow markets to adjust to and evaluate the implications of the proposed changes. While I know that FASB delayed implementation of the new rules reluctantly, I want to thank them for recognizing the importance of allowing the markets to analyze and respond to the new changes.
"Consolidation of securitization QSPE is likely to swell the balance sheets of the affected entities, adversely impact financial ratios, financial covenant performance and regulatory
capital tests; and bring a new chill to credit markets at the exact time when all market participants are working to relieve the current credit crunch. We look forward to working with the FASB to implement the changes and make this transition as smooth as possible."
CONTACT: Jason Vasquez, (202) 557-2950, jvasquez@mortgagebankers.org
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