The Fed to FASB, ‘Thanks for Supporting QE3’

In an effort to eliminate the infamous abuses of repurchase agreement sale accounting illustrated by the demises of Lehman Brothers and MF Global, the Financial Accounting Standards Board reached a decision on Oct. 13, 2012 to restrict collateral providers in repo agreements from treating such transactions as sales. But FASB’s proposed accounting change threatens to make the Federal Reserve’s eventual exit of the latest round of quantitative easing much riskier.