WASHINGTON – CUNA will take a seat at an upcoming roundtable event hosted by Federal Accounting Standards Board at its Norwalk, Conn., headquarters covering accounting for transfers, including loan participations. The issue is critical for credit unions, because if the proposed changes are made, loan participations will be less attractive for credit unions, particularly in the area of member business loans, CUNA Associate General Counsel Mary Dunn said. FASB presently permits loan participations to be treated as sales, but they want to amend that to account for them as secured borrowing, she explained. The accounting standards group has expressed concern that the participating credit union would not receive its funds in the liquidation of the credit union that sold them the participation. The modification would mean the entire loan would remain on the originating credit unions' books, providing no relief from the 12.25% business lending cap. "It will be far, far less attractive in dealing with issues like member business lending," Dunn said. "If credit unions can't participate the loan out, they will quickly bump up against that cap." Representatives from CUNA will attend FASB's June 17 roundtable on its Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. Another is scheduled for May 25. The roundtables will focus on legal issues related to the isolation requirement of Statement 140 and the impact of "setoff" rights.

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