Hedge Trackers’ Ruth Hardie, Senior Director, Client Services, was recently featured in a Thomson Reuters Checkpoint FASB News article titled “Banks, Financial Institutions Urge FASB to Finalize Proposed ‘Multi-Layer’ Hedge Accounting Rules.”
Article Summary: The banking sector wants the FASB to quickly finalize its recently proposed hedge accounting changes, which brings flexible guidance more closely aligned with its risk management strategies. The proposal would allow more than one hedge against a closed portfolio of assets – items such as mortgage loans and mortgage-backed securities.
Hardie commented on how the proposed rules are meaningful to credit unions, in addition to banks:
“Once they start to apply last of layer, they can directly hedge those core earnings assets,” she said. “This is critical because, with COVID and all the new member deposits, they don’t need near as much borrowing anymore. Plus, under cash flow hedge accounting there’s a ‘three strikes you’re out’ mentality where if you are over hedged because you don’t need to borrow anymore and you reduced your borrowing to deleverage your balance sheet, then all of a sudden you end up in trouble with your auditors and with the accounting guidance because your forecasted borrowing didn’t come through.”
Subscribers can read the full article at Thomson Reuters Checkpoint.
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