The Financial Accounting Standards Board is developing guidelines which may make it less likely that collateralized debt obligations will have to be consolidated onto a collateral manager or sponsor's balance sheet under FIN 46, according to industry professionals. Ann McIntosh, project manager at FASB, says the new guidelines, which center on paragraph 8c of FIN 46, address the fees associated with issuing CDOs and whether the collateral manager is the primary decision maker. She says that service providers who can show that the relationship of a collateral manager that issues CDO liabilities is more akin to that of an employee than of a controlling entity may be able to be excluded from that specific paragraph in FIN 46. And this may make it less likely that they will need to consolidate, she says.
...As It Hands Out Consolidation Olive Branch