ICBA News Release
FOR IMMEDIATE RELEASE
ICBA Commends FASB for Progress on Loan Sale Guidance; Urges Further Change
Washington, D.C. (October 14, 2005) - The Independent Community Bankers of America commended the Financial Accounting Standards Board (FASB) for their efforts to ensure that their proposed standards for buying and selling loan participations do not adversely affect community banks.
"FASB's progress in this area is critical to ensuring that banks can continue to buy and sell loan participations and support their small business customers," said Camden R. Fine, ICBA's president and CEO. "But ICBA has concerns about some of the provisions in the standards, and we urge FASB to make additional changes."
FASB's Statement 140, Accounting for Transfers of Financial Assets, proposes guidance that would determine whether loan participations and sales of guaranteed loans can continue to qualify for sale accounting treatment.
ICBA stressed that buying and selling loan participations and guaranteed loans are key activities in community banks. These activities have long been relied on to keep credit flowing in communities, particularly to businesses. ICBA is greatly concerned FASB-proposed changes would disrupt this business that is vitally important to community banks and their customers.
In its comment letter, ICBA urged FASB to permit the continued use of last in-first out/first in-first out arrangements to facilitate loan transactions, clarify that the sale of guaranteed loans would still qualify for sales treatment and provide more time to implement the accounting changes.
ICBA supported FASB's efforts to clarify that a "true sale" legal opinion is not required for every transaction, but urged FASB to go a step further. While proposed language suggests that a legal opinion is not required for each transaction, ICBA is concerned that auditors and bank examiners may require legal opinions more often than FASB intended. ICBA urged FASB to provide some additional guidance on characteristics of true sales that bankers may rely on in determining a legal opinion is not needed in a particular case.