FASB moves on rules to rein in off-balance-sheet loans

05/19/2009 | Bloomberg Businessweek

The Financial Accounting Standards Board took steps to reduce the use of qualifying special purpose entities, a tool that allows financial institutions to keep large loans off their balance sheets. The change would require companies to report the loans to regulators and boost their capital reserve to cover potential losses. FASB's move "addresses the critical need for continued improvement to the accounting for arrangements that were at the epicenter of the financial crisis," said James Kroeker, acting chief accountant at the Securities and Exchange Commission.

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