One of the key triggers of the Great Recession was the fact that many financial institutions had entities that existed off of their balance sheets. In late January, the federal banking and thrift regulatory agencies made changes to the final risk-based capital rule related to the Financial Accounting Standards Board’s adoption of Statements of Financial Accounting Standards 166 and 167.
These new accounting standards make substantive changes to how banking organizations account for many items, including securitized assets, that had been previously excluded from these organizations’ balance sheets.
Watch below as Bill Emmons, assistant vice president and economist at the Federal Reserve Bank of St. Louis, explains what these finalized rules mean for Eighth District and national bankers, as well as financial organizations in general. Read more from Emmons on recent FAS changes.