Revised Proposal: Understanding the Interagency Statement on Complex Structured Finance Activities

Many U.S. financial institutions that have participated in equipment leasing transactions (particularly in the large-ticket and municipal markets) in the last 20 years will be keenly aware that as the structures grew ever more complicated, Congress and the federal regulatory agencies grew intensely interested. Whether the institution had a major role in the transaction or simply provided a service, some degree of scrutiny could be expected, often in conjunction with a tax audit of its client. The risks to financial institutions from participating in complex structured finance transactions of all types became a source for concern for banking and securities regulators. The principal federal regulators responded in 2004 with a proposal that financial institutions investigate, and bear responsibility for evaluating, the legal, tax, and accounting basis of their clients' complex structured finance transactions. The goal: to limit the institutions' own credit, legal, and reputational risk from such participation.

25 minute read October 30, 2006 at 11:10 AM

By

Douglas J. Landy