FDIC expects FAS 166 and 167 to increase bank capital requirements
Federal Deposit Insurance Corporation (FDIC) directors agreed at their August 26th Board meeting that following implementation of Statements of Financial Accounting Standards Nos. 166 and 167 in January 2010, banking organizations affected by the new accounting standards generally will be subject to higher minimum regulatory capital requirements. In order to “better align regulatory capital requirements with the actual risks of disclosures,” banking regulatory agencies have drafted a proposal for comment on whether a phase-in of the increase in regulatory capital requirements is needed.
- Removes concept of the qualifying SPE (“QSPE”). All variable interest entities (including former QSPEs) must be evaluated for consolidation under Interpretation 46(R), as revised by SFAS 167.
- Modifies the financial components approach:
- Clarifies application of the conditions for surrender of control over transferred financial assets.
- Amends the guidance on initial measurement of a transferor’s interest in transferred financial assets
- Enhances disclosure requirements.
- Requires that the assets be isolated.
- Amends certain guidance for determining whether an entity is a variable interest entity (VIE) –Changes nature of kick-out rights held by equity holders for determining whether the entity is a VIE
- Replaces quantitative approach for determining the primary beneficiary (PB) with a qualitative assessment
- Requires ongoing assessments as to whether an enterprise is the PB of a VIE
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.