New Accounting Rules Offer Flexibility in Hedging MBS, But No Significant Changes Expected for Bank Holdings
August 4, 2017
New accounting rules for prepayment-sensitive assets that could give banks more flexibility in how they hedge their MBS investments are expected to be unveiled sometime in the third quarter. The Financial Accounting Standards Board recently announced that it will issue a new standard to simplify rules for hedge accounting. The standard will take effect for public companies in 2019 and private companies in 2020. “The amendments in the new standard will permit more flexibility in hedging interest rate risk for both variable-rate and fixed-rate financial instruments,” FASB said. The organization said...