A new FASB regulation means corporations can no longer, whether for legitimate reasons or otherwise, use special entities called QSPEs to keep transactions off their books. We’re talking trillions of dollars here that must come back on the books, presumably at least some it being losses.Â Some companies and analysts are squealing about how this will hurt companies, but really,Â this change is long overdue. The only way this regulation can be overridden is by a vote of Congress, who probably wouldn’t dare, even if they wanted to.
LIBOR three-month spreads are increasing. This means banks are getting nervous again about lending to each other.
While all this may seem arcane, it’s not. Both will affect us all in many ways, most notably through increased costs of borrowing and difficulties in getting loans or mortgages.