• Obligations of Certain Borrowers Proposed To Be Consolidated on Institutional Lender's Balance Sheets (aka Post-Enron Over-Reaction from the FASB)
  • May 16, 2003
  • Law Firm: Dechert LLP - Office
  • Lenders who invest in credit-tenant lease-backed securities and other instruments issued by special purpose entities (SPEs) face an unusual threat to their balance sheets in the form of the Financial Accounting Standard Board's ("FASB") Proposed Interpretation regarding consolidation. If the recently released Proposed Interpretation is adopted as currently proposed in an Exposure Draft, a lender may be required to consolidate on its balance sheet the SPE that issued debt to the lender, not only for new transactions but also for investments already in the investor's portfolio. The purpose of this memorandum is to draw your attention to this potentially serious problem and to encourage your participation in getting the Exposure Draft changed.