Treatment by the Federal Deposit Insurance Corporation as Conservator or Receiver of Financial Assets Transferred by an Insured Depository Institution in Connection With a Securitization or Participation

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The Federal Deposit Insurance Corporation (the FDIC) is publishing for notice and comment a proposed rule regarding the treatment by the FDIC, as receiver or conservator, of financial assets transferred by an insured depository institution in connection with a securitization or in the form of a participation. The purpose of the rule is to resolve issues raised by Statement of Financial Accounting Standards No. 125 (SFAS 125), as promulgated by the Financial Accounting Standards Board (FASB), as to whether the FDIC's statutory authority to repudiate contracts pursuant to section 11(e) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)) would prevent a transfer of financial assets by an insured depository institution in connection with a securitization or in the form of a participation from satisfying the ``legal isolation'' condition of SFAS 125. Failure to satisfy this condition would prevent such a transfer from being accounted for as a sale in financial statements and reports prepared in accordance with generally accepted accounting principles (GAAP). The proposed rule provides that the FDIC shall not, by exercise of its statutory power to repudiate contracts, recover, recla