US Treasury is looking at off-balance-sheet contingent liabilities, accounting and valuation issues, and credit rating agencies
Accountancy Age, 14 Feb 2008
The US regulators want to alter the rules associated with specially packaged loans following the market turmoil related to subprime credit.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are waiting for the markets to stabilise, before they look to alter the rules associated with loan securitizations which resulted in $146m in losses for banks, Bloomberg.com reported.
'We're looking at off-balance-sheet contingent liabilities. We're looking at accounting and valuation issues. We're looking at the rating agencies,' said Paulson.
The securities were given top-end credit ratings, reducing the need for investors to scrutinize the quality of assets on which the credit was based.
Securities and Exchange Commission chairman Christopher Cox – who with Paulson and Bernanke, were scheduled to testify before the Senate Banking Committee in Washington on the economy and financial markets - said he planned to discuss accounting issues at the hearing, including difficulties valuing thinly traded securities backed by subprime mortgages.
The SEC has so far begun about three dozen investigations into whether companies, including lenders, underwriters and consulting firms, violated securities laws during the subprime boom and the market's subsequent collapse.
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