April 2008: International Banking Federation report on accounting for financial instruments
The International Banking Federation (IBFed) has published Accounting for Financial Instruments: A Conceptual Paper. IBFed is a consortium of banking associations in Australia, Canada, Europe, Japan, and the United States. The paper sets out the position of the IBFed on "the extent to which the fair value measurement meets the needs of the user community and the objectives of financial reporting". The overall conclusions:
- Fair value measurement provides an appropriate accounting base for financial instruments held for trading purposes or otherwise managed on a fair value basis. However, full fair value measurement of financial instruments would overstate the extent to which instruments are held for trading or managed on a fair value basis within the business and the extent to which deep and liquid markets exist. These are highly significant factors in determining the relevance of fair value in financial reporting.
- A mixed measurement model provides investors with better information for evaluating financial institutions. It requires fair value measurement for assets and liabilities managed on a fair value basis and recognizes that not all financial instruments – let alone non-financial assets and liabilities – are managed on a fair value basis or are even capable of reliable fair value measurement. Where an entity does not manage instruments on a fair value basis, amortised cost is the more appropriate way to estimate future cash flows. Fair value information is already disclosed in footnotes, which are an integral part of financial statements and is a more suitable format for providing the information to investors.
- Reality is more complex than can be communicated in a fair value model. Relevant performance reporting will never be achieved if the framework for financial reporting sticks rigidly to either an amortised cost model or a fair value model. A mixed measurement model represents a principles-based approach to measurement by acknowledging the fact that different entities may follow different business models. Instead of the IASB determining that one approach offers a superior model to that of others, the aim should be for the accounting standards to accommodate the various business models and circumstances in which financial instruments are used. As widely recognized at the IASB Roundtables on measurement, a mixed model is more likely to result in useful reporting.
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April 2008: Joint Forum paper on customer suitability in sale of financial produces
The Joint Forum – a consortium of the Basel Committee, IOSCO, and IAIS – has released a paper entitled Customer Suitability in the Retail Sale of Financial Products and Services:
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The customer suitability report considers how supervisors and regulated firms across the banking, securities, and insurance sectors deal with risks posed by the sale of unsuitable retail financial products. The Joint Forum reviewed both the disclosure of information to retail investors and requirements on firms to determine whether recommended investment products are suitable for such investors. The report focuses exclusively on requirements related to retail customers and products with a significant investment component. The Joint Forum evaluated investment-based or investment-linked insurance products, but not those insurance contracts that insure only against risk.
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April 2008: Joint Forum paper on management of risk concentrations
On 27 April 2008, the Joint Forum – a consortium of the Basel Committee, IOSCO, and IAIS – published a paper titled Cross-sectoral Review of Group-wide Identification and Management of Risk Concentrations:
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The Risk Concentrations paper is being released in final form and has also been included in the Joint Forum submissions to the Financial Stability Forum to contribute to its work related to the market turmoil. This paper expands on previous reports and explores the extent to which financial conglomerates active in two or more of the banking, securities, and insurance sectors currently identify, measure, and manage risk concentrations at the firm-wide level and across the major risks to which these firms are exposed. The paper also explores how current and emerging risk techniques, including stress testing and scenario analyses, are employed to identify potential concentrations. It also includes observations and lessons drawn from the market turmoil that begin in mid-2007. An annex to the paper contains a summary of current regulatory requirements relating to risk concentrations.
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April 2008: Discussion of FASB and IASB responses to credit crisis at joint meeting of the two Boards
At their Joint Meeting on 21-22 April 2008 in London, the IASB and FASB discussed the standard-setters' response to the credit crisis.
The FASB Chairman encouraged both Boards to share information on the key issues that emerged during the credit crunch and discuss on the measures to be taken. He said that the three key areas of concern from an accounting perspective are:
- Derecognition (especially in the context of securitisations)
- Consolidation
- Fair value measurement
He continued that the US Senate is interested in some of the accounting issues. He also said that some problems are more compliance issues than problems with the standasrds, and that the reason for the crisis is mainly that the business models employed were flawed.
Summary of Discussion at the Joint IASB-FASB meeting:
Derecognition and Consolidation
On the issue of derecognition and consolidation, the FASB Chairman explained that the relevant US GAAP guidance (SFAS 140 and FIN 46R) will be revised to abandon the exemption from consolidation for qualifying special purpose entities (QSPE) – they would be consolidated in the sponsor's financial statements. He noted that the QSPE concept worked until the credit crunch, but with hindsight they have been ticking time bombs. FASB expects to publish changes to the US GAAP guidance by the end of 2008.
On the IASB side, a derecognition team has been formed to start with a clean sheet approach, and issues have been identified. The project team recognises the time pressure and will bring the issue back to the next Joint Board meeting in October 2008.
The IASB Chairman said that all three projects mentioned above have be prioritised and accelerated. The FASB Chairman supported approaching these projects jointly as far as possible, but that there were different time constraints.
One IASB member noted that IFRS 7 could be used at a starting point for enhanced disclosures. Assessments based on the first full year of application (2007) could be used. One FASB member expressed concerns over the ability to have a converged consolidation standard but thought it should be possible to have a converged disclosures standard.
The FASB Chairman then continued to elaborate on liquidity risk. He noted that many models didn't include liquidity risk and that many FIN 46R calculations did not either. He said that qualitative evaluation of facts and circumstances has to be improved and that the evaluation of whether an entity must be consolidated must be reassessed on an ongoing basis. In response to a question about the timing for the changes to US GAAP, he answered that an exposure draft (ED) is planned before end of June with the final amendments to be released at the end of the year.
On the IASB consolidation project, the project manager reported that the project has been accelerated and that the models in IAS 27 (control model) and SIC 12 (risk and rewards model) are currently being aligned, with improved disclosure. The IASB plans to publish an ED in summer 2008 with the goal of having the single source of guidance on consolidation.
A FASB member noted that it would probably be easier to disclose risky items then to find the right model for consolidation.
Fair value measurement
On fair value measurement the FASB Chairman said that both Boards have received a request from the IIF (Institute of International Finance) to address two issues:
- Allowing management to switch from mark-to-market to mark-to-model in certain situations where market values are not representative.
- Facilitate transfers from the trading book to the bank book for financial institutions.
The IASB Chairman underlined that the Financial Stability Forum (FSF) and the Basel Committee support the IASB's and the FASB's approach to use market values, as markets would be more confused by some sort of arbitrary measurement attribute. He also noted that the fair value measurement project will have a focus on accounting responses to illiquid and contracted markets.
The FASB Chairman informed the Boards that the US Securities Exchange Commission have issued a Paper Advising Registrants to Further Explain Fair Value in their management discussion and analysis.
One IASB member noted that a move from fair value would increase uncertainty in the markets.
The FASB Chairman closed this session with an appeal to share information and align any efforts as far as possible.
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April 2008: Basel Committee announces steps to strengthen the resilience of the banking system
On 16 April 2008, the Basel Committee on Banking Supervision announced a series of steps to help make the banking system more resilient to financial shocks. These include:
- Enhancing various aspects of the Basel II Framework, including the capital treatment of complex structured credit products, liquidity facilities to support asset-backed commercial paper (ABCP) conduits, and credit exposures held in the trading book. At the same time, the Committee notes the importance of prompt implementation of the Basel II framework, as this will help address a number of the shortcomings identified by the financial market crisis.
- Strengthening global sound practice standards for liquidity risk management and supervision, which the Committee will issue for public consultation in the coming months.
- Initiating efforts to strengthen banks' risk management practices and supervision related to stress testing, off-balance sheet management, and valuation practices, among others.
- Enhancing market discipline through better disclosure and valuation practices.
These measures will be introduced in a manner that promotes long-term bank resiliency and strong supervision, while seeking to avoid potentially adverse near-term impacts as the re-pricing of risk and deleveraging process continues in financial markets. The Committee's actions also are in support of the Financial Stability Forum's Working Group on Market and Institutional Resilience, which recently released its report to the G7 Finance Ministers and Central Bank Governors.
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April 2008: European Commission consultation on bank capital requirements Directive
The European Commission has launched a public consultation on possible changes to the Capital Requirements Directive (CRD) (2006/48/EC and 2006/49/EC). The purpose of Directives 2006/48/EC and 2006/49/EC is to ensure the financial soundness of credit institutions and investment firms and thus provides the very backbone of day to day prudential supervision of these institutions; it follows that this legal framework needs to be regularly updated and refined to respond to the needs of stakeholders.
The consultation takes place in the context of on-going work related to the Capital Requirements Directive (CRD) at various supervisory and industry fora. The review of the CRD is, in part, also a response to the recent recommendations of the G-7 Financial Stability Forum.
Opinions are sought on: (a) large exposures, (b) hybrid capital instruments, (c) supervisory arrangements, (d) the waivers for banks organised in networks, and (e) adjustments to certain technical provisions.
The suggested measures concerning large exposures and hybrid capital instruments and the adjustments to the technical provisions are largely based on advice from the Committee of European Banking Supervisors (CEBS). The working document does not constitute a formal Commission proposal. Nevertheless, informal discussions have already started in the European Banking Committee. The consultation is open until 16 June 2008 on: http://ec.europa.eu/internal_market/bank/regcapital/index_en.htm. Comments should be sent to the following e-mail address: markt-crd2008-survey@ec.europa.eu
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April 2008: Joint Forum paper on credit risk transfer
On 1 April 2008, the Joint Forum – a consortium of the Basel Committee, IOSCO, and IAIS – published a paper on Credit Risk Transfer (CRT): Developments from 2005 to 2007. The paper updates a 2005 paper to reflect the continued growth and rapid innovation in the CRT markets. The main findings of the paper are:
- Some of the more complex CRT instruments developed since 2004 are associated with increased leverage and a high variance of loss or high vulnerability to the business cycle.
- A failure to understand some of these risks contributed to the market turmoil of 2007.
- Despite these shortcomings, the structured credit market is likely to survive, but will remain weak for a period of time.
- Supervisors remain concerned about several aspects of the CRT market: its complexity; valuation issues; liquidity, operational and reputational risks; and the broader effects of the growth of CRT. Supervisors believe that market participants must better understand the structure and risks of the CRT products in which they invest, as well as how the rating agencies assign ratings to specific instruments and what circumstances would lead them to downgrade ratings.
- With continued innovation in the CRT markets, the effort and resources that firms and regulators will need to expend to properly understand these instruments increases significantly.
- There are steps that the industry and regulatory community can take to enhance the robustness of their risk management and oversight of these products. The paper includes recommendations in this regard.
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April 2008: IIF interim report on bank market practices
In April 2008, the Institute of International Finance (a banking association) published the Interim Report of the IIF Committee on Market Best Practices. The IIF convened the committee as a result of the deterioration of the US subprime mortgage market. The committee noted:
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Rapidly developing ramifications of market stress have revealed major points of weaknesses in business practices and market dynamics, particularly but not exclusively related to the dramatic growth of complex structured products.
The areas of weakness revealed include deteriorating lending standards by certain originators of credit prior to summer 2007; a decline of underwriting standards both with respect to the packaging of structured products and leveraged loans; excessive
reliance on poorly understood, poorly performing, and less than adequate ratings of structured products; valuation difficulties as assets shifted quickly from liquid to illiquid; purchase of structured products without full appreciation of the risks; liquidity risk and reputational risk exposure of conduits and structured investment vehicles with major adverse implications for sponsoring banks; and difficulties in identifying where exposures reside in a world of widely dispersed risks.
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Paragraphs 65-78 of the report address valuation issues, particularly fair value (mark-to-market) issues. Paragraphs 90-92 address transparency and disclosure issues. The objective of the committee is to arrive at broad agreement on changes in practices necessary to address these weaknesses. The IIF expects to publish a final report in third quarter 2008.
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April 2008: 'Leading-Practice Disclosures for Selected Exposures'
On 11 April 2008, the Senior Supervisors Group of financial regulators from major countries published a set of recommendations for Leading-Practice Disclosures for Selected Exposures. The report responds to the Financial Stability Forum's request that the Senior Supervisors Group undertake a review of disclosure practices regarding exposures to certain instruments that the marketplace now considers to be high-risk or to involve more risk than previously thought, including:
- collateralised debt obligations,
- residential mortgage-backed securities,
- commercial mortgage-backed securities,
- other special purpose entities, and
- leveraged finance.
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April 2008: G-7 ministers seek 'urgent action' by the IASB
On 11 April 2008, the G-7 Finance Ministers and Central Bank Governors, at their meeting in Washington, strongly endorsed the recommendations in the FSF report highlighted in our news story immediately below. Regarding the IASB, the G-7 said:
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We have identified the following recommendations among the immediate priorities for implementation within the next 100 days:
The International Accounting Standards Board (IASB) and other relevant standard setters should initiate urgent action to improve the accounting and disclosure standards for off-balance sheet entities and enhance its guidance on fair value accounting, particularly on valuing financial instruments in periods of stress.
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April 2008: FSF urges IASB to improve accounting for off-balance sheet entities
On 7 April 2008, the Financial Stability Forum, a global organisation of regulators and central bankers, submited a report on Report on Enhancing Market and Institutional Resilience to the G7 Ministers and Central Bank Governors. The IASB participated in preparing the report. The report analyses the causes and weaknesses that have produced the recent turmoil in financial markets worldwide and makes recommendations for correcting those weaknesses. The report addresses the following areas:
- Strengthened prudential oversight of capital, liquidity and risk management
- Enhancing transparency and valuation
- Changes in the role and uses of credit ratings
- Strengthening the authorities' responsiveness to risks
- Robust arrangements for dealing with stress in the financial system
Regarding accounting and disclosure standards for off-balance sheet entities, the report concludes:
The IASB should improve the accounting and disclosure standards for off-balance sheet vehicles on an accelerated basis and work with other standard setters toward international convergence. The report notes:
Off-balance sheet treatment in financial reports can arise as a result of the standards for derecognition (e.g., removing assets from balance sheets through securitisations) and consolidation (e.g., special purpose entities). The standards of the IASB and the US Financial Accounting Standards Board (FASB) differ for both topics and with respect to the required disclosures about off-balance sheet vehicles. The IASB and FASB have projects underway to converge their standards in these areas and this work should be accelerated so that high-quality, consistent approaches can be achieved. In doing so, and consistent with their required due process, the IASB and the FASB should consider moving directly to exposure drafts on off-balance sheet issues, rather than discussion papers, to meet the urgent need for improved standards. Standards should require the risk exposures and potential losses associated with off-balance sheet entities to be clearly identified and presented in financial disclosures. The IASB and FASB should consult investors, regulators, supervisors and other stakeholders for their views during this process, and should take note of issues that have come to light during the current market turmoil and the progress reflected in 2007 annual reports and other disclosures.
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Regarding valuations, the report concludes that:
International standard setters should enhance accounting, disclosure and audit guidance for valuations. The report states that:
- The IASB will strengthen its standards to achieve better disclosures about valuations, methodologies and the uncertainty associated with valuations.
- The IASB will examine its principles and requirements for disclosures about the valuation of financial instruments to identify areas for enhancement in light of lessons learned from the market turmoil. This effort will assess disclosures in year-end 2007 annual reports and draw on the views of investors, firms, auditors, supervisors and regulators about the quality of valuation disclosure practices.
- The IASB will enhance its guidance on valuing financial instruments when markets are no longer active. To this end, it will set up an expert advisory panel in 2008.
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April 2008: Concern about banks' disclosures in Europe
At a hearing conducted by the Economic and Monetary Affairs Committee of the European Parliament, Kerstin af Jochnick, Chair of the Committee of European Banking Supervisors (CEBS), expressed some concerns about current financial statement disclosures by European banks:
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We are concerned that the lack of disclosure on banks' business models and on their role in structured finance activities could make it difficult for market participants to properly assess the banks' risk profile. While the coming into force of the Pillar 3 requirements of the CRD [EU Capital Requirements Directive] and of new accounting disclosure requirements (IFRS 7) should contribute to the quality, granularity and comparability in the disclosure of exposures, the disclosures seem in many cases to be aimed at banks' immediate stakeholders – i.e. at their shareholders – and not so much at market participants in the wider sense. It may be necessary for banks to reconsider their disclosure policies and the principle they build on, especially in times of stress.
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March 2008: US Treasury proposal to overhaul US regulation of financial markets
On 31 March 2008, US Secretary of the Treasury Henry M Paulson Jr released a Blueprint for a Modernized Financial Regulatory Structure that proposes a series of 'short-term' and 'intermediate-term' reforms of the structure for reglating financial institutions and markets in the United States. The changes are of a magnitude not seen since the current regulatory system was set up in response to the 1929 stock market crash and subsequent Great Depression.
- The short-term recommendations focus on taking action now to improve regulatory coordination and oversight in the wake of recent events in the credit and mortgage markets.
- The intermediate recommendations focus on eliminating some of the duplication of the US regulatory system and try to modernise the regulatory structure applicable to certain sectors in the financial services industry (banking, insurance, securities, and futures) within the current framework.
The report also includes a conceptual model for an 'optimal' regulatory framework. The optimal structure envisions the Federal Reserve as the 'market stability regulator', a new 'prudential financial regulator' for banks and savings institutions, and a new business conduct and corporate finance regulator. The latter would assume the SEC's current responsibilities over corporate disclosures, corporate governance, and accounting oversight.
Among the short-term recommendations:
- President's Working Group on Financial Markets (PWG). This existing inter-agency coordinating body should be expanded, and its role as policy-maker should be enhanced.
- Mortgage origination. Create a six-member federal Mortgage Origination Commission (MOC) that would establish uniform minimum licensing qualification standards for state mortgage market participants. The MOC would also evaluate, rate, and report on the adequacy of each state's system for licensing and regulation of participants in the mortgage origination process.
- Liquidity provisioning by the Federal Reserve. First, the current temporary liquidity provisioning process during those rare circumstances when market stability is threatened should be enhanced to ensure that: the process is calibrated and transparent; appropriate conditions are attached to lending; and information flows to the Federal Reserve through on-site examination or other means as determined by the Federal Reserve are adequate. Key to this information flow is a focus on liquidity and funding issues.
Among the intermediate-term recommendations:
- Federal thrift institutions. Federally chartered savings and mortgage institutions should become national
banks. The Office of Thrift Supervision would be closed, and its operations assumed by the Office of the Comptroller of the Currency (the federal bank regulator). This transition would take place in two years.
- Federal banking supervision. There should be direct federal supervision of state-chartered banks. A number of proposals are set out in this regard.
- Payment and settlement systems oversight. There should be direct federal oversight of all systems used to transfer funds and financial instruments between financial institutions and between financial institutions and their customers.
- Insurance. A federal system for chartering, licensing, regulating, and supervising insurers should be created. Insurers, reinsurers, agents, and broers would elect to be regulated under the federal system or to continue under the current state-based regulation. A new Office of Insurance Oversight would be established within the Treasury Department to take the lead role in federal insurance regulation.
- Futures and securities. The Commodity Futures Trading Commission (CFTC, which regulates futures and options) and the Securities and Exchange Commission (SEC, which regulates securities, mutual funds, stock markets, and broker/dealers) should be merged to provide unified oversight and regulation of the futures and securities industries.
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March 2008: SEC advises registrants to further explain fair value in MD&A
The US SEC's Division of Corporation Finance has sent a letter to certain financial institutions concerning additional disclosure considerations in Management's Discussion and Analysis (MD&A) regarding fair value for their upcoming filings on Form 10-Q. While the letter was sent only to financial institutions, we understand that the SEC staff has indicated that the letter 'can be applicable to any company.'
The letter reminds registrants that have significant amounts of financial instruments to consider the SEC's requirements for disclosures in MD&A. Regulation S-K, Item 303,1 requires registrants, among other things, to discuss in their periodic filings any known trends or any known demands, commitments, events, or uncertainties that the registrants reasonably expect to have a material impact, either favorable or unfavorable, on their results of operations, liquidity, or capital resources.
This letter is in response to the challenges, resulting from current market conditions, in determining the fair value of certain financial instruments, such as asset-backed securities, loans carried at fair value or lower of cost or market (fair value), credit default swaps, and other derivative assets and liabilities. Because of the decline in or disappearance of liquidity in some markets, judgment has become increasingly important in estimating fair values. In addition, there may be a broader range of reasonable fair value estimates for some financial instruments. As a result, judgments may materially affect a registrant's reported results of operations, liquidity, or capital resources.
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March 2008: PWG Policy Statement on Financial Market Developments
The United States President's Working Group (PWG) on Financial Markets has issued a Policy Statement on Financial Market Developments. The policy statement sets out recommendations to improve the future state of US and global financial markets. Those recommendations cover improved transparency and disclosure, better risk awareness and management, and stronger oversight. The PWG believes that, "collectively, the recommendations will mitigate systemic risk, help restore investor confidence, and facilitate economic growth".
The policy statement offers the PWG's insight on causes of recent market issues and next steps for mitigating systemic risk, restoring investor confidence, and facilitating stable economic growth. The PWG will work with foreign regulators, finance ministries, and central banks through the international Financial Stability Forum and other venues to address these challenges globally. The PWG intends to issue a progress statement in the fourth quarter of 2008 and consider whether further steps are needed to address weaknesses in financial markets, institutions and related supervisory policies.
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March 2008: Supervisory Agencies Issue Joint Report Assessing Risk Management Practices
On 6 March 2008, Senior financial supervisors from five countries issued a report that assesses a range of risk management practices among a sample of major global financial services organizations. This report Observations on Risk Management Practices during the Recent Market Turbulence summarises a joint review that supervisors initiated this past autumn. The seven supervisory agencies participating in this project are the French Banking Commission, the German Federal Financial Supervisory Authority, the Swiss Federal Banking Commission, the UK Financial Services Authority, and, in the United States, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and the Federal Reserve. They are referred to collectively as the 'Senior Supervisors Group'.
The report also reflects the results of a roundtable discussion that participating supervisory agencies held with industry representatives on 19 February 2008, at the Federal Reserve Bank of New York. Supervisors undertook this effort to evaluate the effectiveness of current risk management practices during this period of stress. These observations could then be used in supervising individual firms and in assessing potential future changes in supervisory requirements, guidance and expectations.
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March 2008: Deloitte Special Update – Keeping Your Cool Through a Financial Crisis
Deloitte & Touche Investment Advisors has published a Special Update: Keeping Your Cool Through a Financial Crisis. This special economic and market review is presented to provide perspective and context within which to evaluate your portfolio performance as well as a forward look at the questions, events, and circumstances that may impact performance in the quarter ahead – in light of the current pressures on the US financial system. Topics addressed:
- Our Financial System Under Pressure
- The Fed to the Rescue
- Could the Overall US Financial
- Systems Fail?
- Keeping Your Perspective
- What Are the Signs that We Are Out of the Woods?
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December 2007: 'Big 6' GPPC – Determining fair values of financial instruments under IFRSs
The six largest accounting networks under the auspices of the Global Public Policy Committee (GPPC) have jointly issued a paper entitled Determining Fair Value of Financial Instruments under IFRSs in Current Market Conditions. The objective of the paper is to enhance awareness of the requirements of IFRSs in relation to the determination of fair value of financial instruments and related disclosures. It is similar to the paper issued by the Center for Audit Quality on Measurement of Fair Value in Illiquid (or Less Liquid) Markets under US GAAP (see the item immediately below). A draft of this paper was shared with the Financial Stability Forum, some board members and staff of the IASB, Standing Committee No. 1 of IOSCO, and the Accounting Task Force of the Basel Committee on Banking Supervision. The GPPC group believes that drawing attention to the issues is helpful in advance of the 2007 year-end reporting season, particularly because this is the first time that IFRSs – and especially the literature relating to valuation of financial assets and liabilities – has been applied extensively in difficult market conditions.
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October 2007: Center for Audit Qualithy – Accounting issues arising from illiquid market conditions
The Center for Audit Quality (CAQ) issued three white papers addressing key accounting issues arising from the current illiquid market conditions from the perspective of existing United States GAAP. While the papers are written in a US GAAP context, the issues are likely to be of interest in an IFRS context as well. The CAQ was created by the American Institute of CPAs "to foster confidence in the audit process and to aid investors and the capital markets by advancing constructive suggestions for change rooted in the profession's core values of integrity, objectivity, honesty and trust".
Download the three CAQ white papers:
- Fair Value Measurements in Illiquid (or Less Liquid) Markets (PDF 32k). The paper discusses measurement of fair value under existing US GAAP (most of which is contained in SFAS 157 Fair Value
Measurements) in the context of illiquid (or less liquid) market conditions that currently exist in many segments of the credit markets. Although much of the discussion is in the context of assets backed by subprime mortgage loans, the GAAP principles discussed regarding the measurement of fair value are also applicable to the measurement of the fair value of other assets (such as unsecuritized assets), not just those backed by subprime mortgage loans.
- Consolidation of Commercial Paper Conduits (PDF 31k). The objective of this paper is to discuss the application of FASB Interpretation No. 46 (revised December 2003) Consolidation of Variable Interest Entities by sponsors of commercial paper conduits, particularly as impacted by market conditions that currently exist in many segments of the credit markets, including illiquid (or less liquid) conditions in the commercial paper markets.
- Accounting for Underwriting and Loan Commitments (PDF 39k). This paper discusses existing US GAAP associated with commitments to lend money or underwrite securities in the context of illiquid (or less liquid) market conditions that currently exist in many segments of the credit markets.
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