April 30 (Bloomberg) -- The Financial Accounting Standards Board will approve rules on off-balance-sheet accounting by June, forcing banks to add billions of dollars of assets to their books, Chairman Robert Herz said.
Rules that let companies keep assets and liabilities including mortgages and credit-card receivables off their balance sheets âwere stretched,â Herz said today at an accounting conference at Baruch College in New York. The changes would take effect next year, he said.
U.S. bank regulators examining finances of 19 large banks calculated that the institutions would record $900 billion in off-balance-sheet assets in 2010, according to a Federal Reserve report released April 24 as part of the so-called stress tests. The Fed based its calculation on data provided by the banks.
In July, FASB postponed by at least a year the effective date of the changes after banks including Citigroup Inc. and trade groups complained. The Securities Industry and Financial Markets Association and the American Securitization Forum said the measure may make companies appear to be short of capital during regulatory reviews.
âSome in corporate Americaâ have an âaddictionâ to off- balance-sheet treatment, Herz said at a separate accounting conference in New York sponsored by Pace University. The off- balance-sheet rule changes will be approved by Norwalk, Connecticut-based FASB in late May or June, Herz said.
Investors are wary of a companyâs unknown obligations as the worldâs biggest banks and brokerages reported more than $1.3 trillion in writedowns and credit losses since the start of 2007, some stemming from losses at off-balance-sheet vehicles.