FASB Statement 166 and Commercial Loan Participations


Corporate Finance | Capital Markets, Financial Institutions + Financial Services, and Structured Finance + Securitization

Kenneth E. Kohler

Kenneth E. Kohler


Christie Adams

In the months since FASB Statement of Accounting Standards No. 166 (FAS 166) took effect for annual reporting periods starting after Nov. 15, 2009, financial institutions involved in loan participations have struggled to master new accounting and disclosure standards for such structures.  FAS 166 imposes a detailed set of conditions for meeting the definition of "participating interest."  Financial institutions that sell loan participations must meet standards for both participating interest and surrender of control, before they can report the sale and remove it from their books.  Certain provisions in loan participation agreements will not qualify for accounting sales treatment, meaning they must be treated as secured borrowings.  The ramifications for financial companies' financial statements are significant, so advisors must steep themselves in the implications of FAS 166.  Listen as our panel of experienced advisors sifts through the complexities of FAS 166 and gives you the bottom line on actions that must be taken to comply with the new standards in time for the next financial reports.

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