15 June 2009

ABA calls for co-ordination in changes to regulatory capital calculations

We are concerned that the new rule may create greater confusion in the interpretation of financial statements as opposed to offering greater clarity" said Donna Fisher, senior vice president of tax and accounting at ABA.

The American Bankers Association expressed concern over new accounting rules that would affect the accounting for off balance sheet vehicles as stated in the last FSAB statements.

 

"We are concerned that the new rule may create greater confusion in the interpretation of financial statements as opposed to offering greater clarity" said Donna Fisher, senior vice president of tax and accounting at ABA.

 

"We have been communicating with the banking agencies to ensure that any changes to regulatory capital risk weightings reflect only the actual risk posed to the bank and that any increases in capital be accompanied by an appropriate transition period," said Fisher.

 

ABA recommended changes to recognize underlying guarantees of securitized loans. Further, the requirements should recognize that, in many cases, the newly-reported loans reside in securities held by third parties and, thus, are not available to the bank or its creditors, ABA said in the letter.

 

Press release