FASB: loan commitments must be treated like derivatives
The US Financial Accounting Standards Board (FASB) ruled last month that some unfunded loan commitments made by banks should be treated like derivatives and marked-to-market. The ruling came nearly nine months after Goldman Sachs first proposed the approach and sparked a debate between commercial and investment bankers.
But the type of commitments that set off the controversy – those to investment-grade borrowers – are unlikely to be affected very much, while leveraged (below-investment-grade) transactions may become more expensive.
Goldman Sachs
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