Alert August 05, 2008

FASB Delays Effective Date for Revised FAS 140 Concerning Securitizations

The Financial Accounting Standards Board (“FASB”)  delayed the effective date for its amendments (the “FAS 140 Amendments”) to Financial Accounting Standards No. 140 – Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities (“FAS 140”) from January 1, 2009 to January 1, 2010.  The FAS 140 Amendments would reduce banks’ ability to get “sale” accounting treatment when they securitize loans (including, e.g., mortgage-backed securities, auto loans and credit card loans) and, accordingly, would reduce banks’ ability to transfer these loans off their balance sheets.  Prior to the effective date of the FAS 140 Amendments, FASB must issue a proposed version of the FAS 140 Amendments and, after a public comment period, approve and issue a final version of the FAS 140 Amendments.