ASF, SIFMA Oppose 'Q' Elimination

By Ed Zwirn

“While the ASF and SIFMA agree that a comprehensive review of accounting standards in these areas is appropriate, the groups are concerned that the proposed changes may impair securitization market activity by making it more difficult and expensive to finance mortgage, automobile, credit card, student loan and other forms of consumer and business debt,” the two groups said in a joint statement.

“Over-consolidation of the special purpose entities used in securitization accounting can be just as confusing to users of financial statements as under-consolidation,” the groups stated.

ASF Executive Director George Miller told the Senate Banking Committee last week that transactions “potentially affected” by the accounting change would include $7.2 trillion of mortgage-related securities, $2.5 trillion of other asset-backed securities, and $816 billion of asset-backed commercial paper.

“Although we cannot presently estimate which or how many of these transactions would be affected by the proposed changes, consolidation of even a significant fraction would be a momentous change, with significant market consequences,” he said.

“We are very concerned that FASB's current course of action… may have serious and unintended consequences,” he said, adding that “a 60-day public comment period does not provide adequate time to consider the proposed revisions and other possible alternatives.”

According to the exposure draft, the revised statements would be effective for companies with fiscal years starting after Nov. 15, 2009. The disclosures required under FIN 46R would be effective for financial statements issued as of Dec. 31, 2008.

The 60-day comment period ends Nov. 15.

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