SFIG Executive Director on Capitol Hill

SFIG Executive Director, Richard Johns, was on Capitol Hill on Tuesday meeting with key Members of Congress in the House of Representatives to discuss the implications to capital and reserves from Financial Accounting Standards 166 and 167. FAS 166 and 167, implemented in 2010, govern the question of whether a securitization will be on-balance sheet or off-balance sheet with respect to the sponsor of a securitization. SFIG discussed the problem with having moved to an accounting standard that ignored the contractual transfer of  risk and vast implications to the real economy that derive from the consequential holding of redundant capital and loan loss reserves.

The meeting was following the recent Treasury report on capital markets that also highlighted the need to eliminate redundant capital requirements, specifically highlighting the issue of capital being tied to the amount of assets that are consolidated for accounting purposes. For SFIG's in-depth analysis of the report's key proposals which could impact the structured finance and securitization markets, please click here. SFIG will continue to advocate and educate on Capitol Hill on behalf of the structured finance industry as the important debate surrounding capital requirements continues.

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