Full text of Board of Governors of the Federal Reserve System : Documents Relating to the Financial Crisis of 2007-2009 : Federal Reserve Responds to New Accounting Standards, June 12, 2009

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Press Release

Release Date: June 12, 2009
For immediate release
The Federal Reserve notes the Financial Accounting Standards Board's publication today of
Statements of Financial Accounting Standards No. 166 and 167 (FAS 166 and 167), which will have
a material effect on banking organizations' accounting for off­balance sheet vehicles. These
statements, which become effective in 2010, address weaknesses in accounting and disclosure
standards for off­balance sheet vehicles. The new standards amend Statement of Financial
Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities (FAS 140), and FASB Interpretation No. 46(R), Consolidation of
Variable Interest Entities (FIN 46(R)).
The Federal Reserve is reviewing regulatory capital requirements associated with the adoption of
the new accounting standards. In conducting this review, the Federal Reserve is considering a broad
range of factors including the maintenance of prudent capital levels, the record of recent bank
experiences with off­balance sheet vehicles, and the results of the recent Supervisory Capital
Assessment Program (SCAP). As part of the SCAP, participating banking organizations' capital
adequacy was assessed using assumptions consistent with standards ultimately included in FAS 166
and FAS 167.
Banking organizations should take into account in their internal capital planning processes the full
impact of FAS 166 and 167 and assess whether additional capital may be necessary to support the
risks associated with vehicles affected by the new accounting standards.