The Financial Accounting Standards Board, reversing an earlier position, is now leaning toward de-claring that securitizations backed by revolving assets such as credit card receivables cannot be recogniz-ed as sales for accounting purposes.

The board will discuss the issue again at an open meeting on Nov. 2 or Nov. 9, said Halsey Bullen, the FASB staffer who directs the securi-tization project.

If the decision holds and becomes part of FASBs final rule on securiti-zation, the asset-backed market could get rocked, because the ability to move assets off balance sheets via securitization is one of the main reasons why securitizations take place.

Its big, Bullen concurred. But its tentative.

The decision on revolving assets was one of three that FASB reached on Oct. 15. FASB also decided that assets and liabilities that are retained in a securitization should be carried at fair value rather than verifiable value, as the preliminary exposure draft on securitization states. In addi-tion, the board reaffirmed language in the preliminary exposure draft saying in essence that if the assets are readily availablewhich most securitized assets arethe origina-tor can retain certain options, such as the option to call the assets and still get off- balance sheet treatment.

FASB also decided to abandon the controversial requirement that a securitization be a true sale at law to qualify as an accounting sale. When a preliminary version of the securitization exposure draft was released a few weeks ago, the true sale requirement was opposed by most attorneys in the asset-backed market.

Instead the board will look for a more economic concept, Bullen said. Were moving toward des-criptive rather than legal language ... that speaks to the same level of isolation [as a true sale].

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