The Financial Accounting Standards Board announced on Wednesday that it has pushed back the deadline that banks and financial institutions will have to implement the amendments outlined in FAS 140 by one year.
Under FAS 140, banks and finance companies will be required to consolidate entities used in securitizations, commonly referred to as qualified special purpose entities (QSPE). Mortgages, as well as other types of loans, are expected to be affected by the new provisions.

Shortly after FASB announced the delay, Kieran P. Quinn, CMB, chairman of the Mortgage Bankers Association, issued a statement on the forthcoming proposal that he said would bring “sweeping changes to securitization accounting.” According to Quinn, the MBA has fundamental concerns with the proposed amendments in FAS 140.
He explained, “Consolidation of securitization QSPE is likely to swell the balance sheets of the affected entities; adversely impact financial ratios, financial covenant performance and regulatory capital tests; and bring a new chill to credit markets at the exact time when all market participants are working to relieve the current credit crunch.”
Although FASB has been pressured by the Securities and Exchange Commission (SEC) to act quickly and was reluctant to initiate the postponement, Quinn said the delay was a constructive move. He emphasized that the extended time would allow markets to adjust to and evaluate the implications of the changes and foster a smooth transition.
According to a Financial Week report, FASB members said the delay was due to time constraints because the original January 1 start date would not have given the board enough time to issue a final version of the new standards.