Following a year of pondering, listening, and reviewing, the Financial Accounting Standards Board has decided to eliminate the concept of qualified special purpose entities, commonly known as "Q's." FASB has been troubled by the existence of Q's for some time, and last year proposed eliminating the accounting device, which allows banks and other financial companies to hold many asset-based securities off-balance sheet. FASB's move may not have a dramatic impact on income statements across the entire banking sector, but it will dent Tier 1 capital levels at institutions that sold mortgage and other loans into such securities.

These assets will now show up on the balance sheet at the start of the upcoming fiscal year — Jan. 1, 2010, for most institutions. "Much of the exposure might be overstated," says Michael Gullette, vice president of accounting and financial management at the American Bankers Association, although some banks "will have more of a charge." Still, banks should have already made provisions for the some of the losses. FASB expected to finalize the rule changes by the end of June.

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