CUNA Regulatory Comment Call


April 27, 2004

FASB Request for Information Regarding Loan Participations

EXECUTIVE SUMMARY

DESCRIPTION OF THE REQUEST FOR INFORMATION

QUESTIONS

  • Is the information about setoff rights in the FASB paper accurate for transferors subject to the U.S. Bankruptcy Code as well as transferors subject to receivership by the NCUA or other regulatory agencies?

    Yes ______ No ______

    If not, what are the inaccuracies?
















  • How are rights of setoff currently considered in true sales analyses performed by attorneys? If they are not considered, why not?
















  • What additional information about setoff rights should the Board consider? For example,

    a. Does a setoff right exist between the original debtor and the transferee?
    b. Do setoff rights exist if an affiliate of the transferor has a liability to the obligor?
















  • Can setoff rights be eliminated?

    Yes ______ No ______

    If so, how can the elimination be accomplished?
















  • Are the legal aspects the same for transferors subject to the U.S. Bankruptcy Code as for transferors subject to receivership by NCUA or other regulatory agencies?

    Yes ______ No ______

    If not, what are the differences?
















  • The FASB Board recently discussed defining isolation of financial assets to mean that the value of those assets to the transferee does not depend on the financial performance of the transferor and is not affected by bankruptcy, receivership, or changes in the creditworthiness of the transferor. Given that definition of isolation, what factors other than setoff rights are not typically considered by attorneys in rendering true sale opinions that may interfere with isolation of transferred assets from the transferor and its affiliates? Please explain why those factors are not considered.
















  • Other comments?
















  • Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com
    Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com
    Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com
    Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com