FASB reverses on loan commitments
The US Financial Accounting Standards Board (FASB) has ruled that undrawn loan commitments will not be subject to derivatives accounting rules and do not have to be marked-to-market – a victory for commercial lenders.
FASB had ruled in December that unfunded loan commitments were essentially options on loans, and should therefore be subject to its fair-value accounting rule for derivatives, FAS 133. The
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