Talk:Securitization
From Riski
ASF PROJECT RESTART PROPOSES RISK RETENTION & ISSUES FINAL RMBS DISCLOSURE AND REPORTING PACKAGES
New York, NY, July 15, 2009—The American Securitization Forum (ASF) today issued a request for comment (RFC) on its new Model Residential Mortgage-Backed Securities (RMBS) Representations and Warranties, designed to enhance the alignment of incentives of mortgage originators with those of investors in mortgage loans. The ASF also released the final ASF RMBS Disclosure and Reporting Packages, which will significantly increase the transparency of RMBS to investors and credit rating agencies. Together, they represent the next phase of ASF Project RESTART, an industry-developed initiative begun in February, 2008 to help rebuild investor confidence in mortgage and asset-backed securities, restore capital flows to the securitization markets and, ultimately, increase the availability of affordable credit to all Americans.
From the FT: Under Restraint, July 7, 2009
Earlier today, the Financial Accounting Standards Board issued a press release announcing the publication of Statement of Financial Accounting Standards No. 166 (FAS 166), Accounting for Transfers of Financial Assets (an amendment of FAS 140), and FAS 167, Amendments to FIN 46R. (FIN 46R is: Consolidation of Variable Interest Entities.)
FASB has also posted a briefing paper giving a brief, plain English explanation of the new standards.
As noted in FASB's press release, the new standards, "will change the way entities account for securitizations and special-purpose entities [SPEs]." In terms of effective date, FASB notes: "Both Statements 166 and 167 will be effective at the start of a company’s first fiscal year beginning after November 15, 2009, or January 1, 2010 for companies reporting earnings on a calendar-year basis."
Although the standards will apply to all types of companies, they are expected to potentially have the greatest impact on financial institutions which enter more frequently into the types of transactions (e.g. securitizations, SPEs and certain other asset transfers) that are within the scope of the standards. Therefore, FASB adds that the new standards "will impact financial institution balance sheets beginning in 2010." FASB also notes that the impact of the impending changes under FAS 166 and FAS 167 were taken into account by regulators in the recent stress tests conducted on the largest banking institutions by bank regualtors. FASB adds that the new standards "were initiated at the request of investors, the SEC, and The President's Working Group on Financial Markets."
- Fitch: Off-Balance Sheet Accounting Amendments Unlikely to Effect Credit Ratings
NEW YORK--(BUSINESS WIRE)--Fitch Ratings does not expect that Statement of Financial Accounting Standard (SFAS) 166 and SFAS 167, relating to the reconsolidation of off-balance sheet securitizations, to result in negative rating actions as the economics of the off-balance sheet transactions will remain the same. Fitch does, however, believe there will be challenges for issuers and analysts in transitioning to a new set of accounting standards.
For issuers, "the structuring of financial products could change," said Senior Director Meghan Crowe, "as the qualified special purpose entity ceases to exist and the test for consolidation of variable interest entities switches to a qualitative focus from a quantitative one. Furthermore, eliminating the regulatory capital arbitrage associated with off-balance sheet accounting could yield lower ABS volumes, although Fitch believes this market will remain a necessary component of many issuer funding profiles."
Analysts will need to deal with changes in financial statement content, which could hamper the evaluation of credit on a historical and relative basis and it could become more difficult to identify unencumbered assets with more secured financing added to the balance sheet. Additionally, the four measurement methods for re-consolidation, permitted by FASB, could make peer comparisons more difficult going forward.
The Fitch report, 'Off-Balance Sheet Accounting Changes: SFAS 166 and SFAS 167', published today:
-- Discusses the analytical implications associated with the accounting changes;
-- Outlines the four measurement methods for re-consolidation permitted by FASB; and
-- Presents a hypothetical example of adjustments made to the balance sheet and income statement as a result of re-consolidation.
The Fitch Special Report, 'Off-Balance Sheet Accounting Changes: SFAS 166 and SFAS 167,' is available on the Fitch Ratings web site www.fitchratings.com.
