A key announcement which will affect the future of the financial crisis

My readers will know that I have urged them to ignore all the other "noise" that is generated regarding the financial crisis, and to focus exclusively on what is happening or is likely to happen regarding toxic assets.

Speaking a few days ago at an accounting conference at Baruch College in New York City, Robert Herz, (Chairman of the Financial Accounting Standards Board or FASB, which sets U.S. accounting rules), is "pretty close" to issuing a new standard on securitization accounting that will affect off-balance sheet assets.

We should expect the new standard "in the next few months", he said, and it is intended to take effect next year.

The change, to two accounting rules known as FAS 140 and FIN 46R, will impact the treatment of the trillions of dollars in off-balance-sheet assets. The FASB already voted last year to eliminate the concept of the "qualifying special-purpose entity," or QSPE. Banks used these to keep "assets" like mortgage-backed securities off their books.

Earlier standards on off-balance sheet accounting had been "stretched, abused and
violated" in the run-up to the credit crisis, he said.

I wait to see if the new standard will actually create transparency - it is possible to create transparency by several different means.

The reaction of the investment industrym to the proposed EU rules regarding the matter, is not a good omen. It seems that the investment industry is scared stiff of transparency and does not want any of it. Clearly, the investment industry prefers to try to keep its activities unhampered, even it that means that the whole of the rest of the world suffers. Sphere: Related Content