Fast-tracking consolidation of special-purpose entities would abruptly fill corporate financials with losses, two securities trade groups assert.
Declaring that forcing companies to abruptly consolidate the results of special-purpose entities (SPEs) would likely "swell the balance sheets" of the affected companies with losses and shatter loan covenants, two securities trade groups are asking the Financial Accounting Standards Board to put off the effective date of such proposed requirements.
The two organizations, the American Securitization Forum and Securities Industry and Financial Markets Association wrote FASB on Wednesday that the are worried that board's fast-tracking of proposals to incorporate reporting of SPEs into company financials could lock up corporate capital, force companies to explain "dramatic changes in their financial statements to investors and lenders," and, in some cases, be forced to seek waivers for breaches of financial covenants.
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