Staff Accounting Bulletin No. 109, 63484-63485 [E7-21927]
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63484
Federal Register / Vol. 72, No. 217 / Friday, November 9, 2007 / Rules and Regulations
institution makes a request, the
institution shall mail or deliver the
disclosures within a reasonable time
after it receives the request and may
provide the disclosures in paper form,
or electronically if the consumer agrees.
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percentage yield) the advertisement must
clearly refer the consumer to the location
where the additional required information
begins. For example, an advertisement that
includes a bonus or annual percentage yield
may be accompanied by a link that directly
takes the consumer to the additional
information.
§ 230.10
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[Removed]
4. Section 230.10 is removed and
reserved.
I 5. In Supplement I to Part 230, the
following amendments are made:
I a. In Section 230.4—Account
disclosures, under (a)(2)(i), paragraphs
3. and 4. are revised.
I b. In Section 230.8—Advertising,
under (a) Misleading or inaccurate
advertisements, paragraph 9. is revised
and new paragraph 11. is added.
I c. In Section 230.8—Advertising,
under (b) Permissible rates, paragraph 4.
is removed.
I d. In Section 230.8—Advertising,
under (e)(1)(i), paragraph 1. is revised.
I e. Section 230.10—Electronic
Communication is removed and
reserved.
The amendments read as follows:
I
Supplement I to Part 230—Official Staff
Interpretations
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mstockstill on PROD1PC66 with RULES
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9. Electronic advertising. If an electronic
advertisement (such as an advertisement
appearing on an Internet Web site) displays
a triggering term (such as a bonus or annual
VerDate Aug<31>2005
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(e) Exemption for certain advertisements
(e)(1) Certain media
(e)(1)(i)
1. Internet advertisements. The exemption
for advertisements made through broadcast
or electronic media does not extend to
advertisements posted on the Internet or sent
by e-mail.
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By order of the Board of Governors of the
Federal Reserve System, October 31, 2007.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E7–21701 Filed 11–8–07; 8:45 am]
BILLING CODE 6210–01–P
[Release No. SAB 109]
Section 230.8—Advertising
(a) Misleading or Inaccurate Advertisements
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17 CFR Part 211
3. Timing for response. Ten business days
is a reasonable time for responding to
requests for account information that
consumers do not make in person, including
requests made by electronic means (such as
by electronic mail).
4. Use of electronic means. If a consumer
who is not present at the institution makes
a request for account disclosures, including
a request made by telephone, e-mail, or via
the institution’s Web site, the institution may
send the disclosures in paper form or, if the
consumer agrees, may provide the
disclosures electronically, such as to an email address that the consumer provides for
that purpose, or on the institution’s Web site,
without regard to the consumer consent or
other provisions of the E-Sign Act. The
regulation does not require an institution to
provide, nor a consumer to agree to receive,
the disclosures required by § 230.4(a)(2) in
electronic form.
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SECURITIES AND EXCHANGE
COMMISSION
(a)(2) Requests
(a)(2)(i)
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Section 230.4—Account Disclosures
(a) Delivery of Account Disclosures
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11. Additional disclosures in connection
with the payment of overdrafts. The rule in
§ 230.3(a), providing that disclosures
required by § 230.8 may be provided to the
consumer in electronic form without regard
to E-Sign Act requirements, applies to the
disclosures described in § 230.11(b), which
are incorporated by reference in § 230.8(f).
18:07 Nov 08, 2007
Jkt 214001
Staff Accounting Bulletin No. 109
Securities and Exchange
Commission.
ACTION: Publication of staff accounting
bulletin.
AGENCY:
SUMMARY: This staff accounting bulletin
(‘‘SAB’’) expresses the views of the staff
regarding written loan commitments
that are accounted for at fair value
through earnings under generally
accepted accounting principles. SAB
No. 105, Application of Accounting
Principles to Loan Commitments (‘‘SAB
105’’), provided the views of the staff
regarding derivative loan commitments
that are accounted for at fair value
through earnings pursuant to Statement
of Financial Accounting Standards No.
133, Accounting for Derivative
Instruments and Hedging Activities.
SAB 105 stated that in measuring the
fair value of a derivative loan
commitment, the staff believed it would
be inappropriate to incorporate the
expected net future cash flows related to
the associated servicing of the loan. This
SAB supersedes SAB 105 and expresses
PO 00000
Frm 00040
Fmt 4700
Sfmt 4700
the current view of the staff that,
consistent with the guidance in
Statement of Financial Accounting
Standards No. 156, Accounting for
Servicing of Financial Assets, and
Statement of Financial Accounting
Standards No. 159, The Fair Value
Option for Financial Assets and
Financial Liabilities, the expected net
future cash flows related to the
associated servicing of the loan should
be included in the measurement of all
written loan commitments that are
accounted for at fair value through
earnings. SAB 105 also indicated that
the staff believed that internallydeveloped intangible assets (such as
customer relationship intangible assets)
should not be recorded as part of the fair
value of a derivative loan commitment.
This SAB retains that staff view and
broadens its application to all written
loan commitments that are accounted
for at fair value through earnings.
The staff expects registrants to apply
the views in Question 1 of SAB 109 on
a prospective basis to derivative loan
commitments issued or modified in
fiscal quarters beginning after December
15, 2007.
DATES: November 5, 2007.
FOR FURTHER INFORMATION CONTACT:
Ashley W. Carpenter, Office of the Chief
Accountant (202) 551–5300 or Craig C.
Olinger, Division of Corporation
Finance (202) 551–3400, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The
statements in staff accounting bulletins
are not rules or interpretations of the
Commission, nor are they published as
bearing the Commission’s official
approval. They represent interpretations
and practices followed by the Division
of Corporation Finance and the Office of
the Chief Accountant in administering
the disclosure requirements of the
Federal securities laws.
Dated: November 5, 2007.
Florence E. Harmon,
Deputy Secretary.
PART 211—[AMENDED]
Accordingly, Part 211 of Title 17 of
the Code of Federal Regulations is
amended by adding Staff Accounting
Bulletin No. 109 to the table found in
Subpart B.
I
Staff Accounting Bulletin No. 109
I The staff hereby amends and replaces
Section DD of Topic 5, Miscellaneous
Accounting, of the Staff Accounting
Bulletin Series. Topic 5: DD (as
amended) expresses the views of the
staff regarding written loan
E:\FR\FM\09NOR1.SGM
09NOR1
Federal Register / Vol. 72, No. 217 / Friday, November 9, 2007 / Rules and Regulations
commitments that are accounted for at
fair value through earnings under
generally accepted accounting
principles.
Note: The text of SAB 109 will not appear
in the Code of Federal Regulations.
Topic 5: Miscellaneous Accounting
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mstockstill on PROD1PC66 with RULES
DD. Written Loan Commitments
Recorded at Fair Value Through
Earnings
Facts: Bank A enters into a loan
commitment with a customer to
originate a mortgage loan at a specified
rate. As part of this written loan
commitment, Bank A expects to receive
future net cash flows related to servicing
rights from servicing fees (included in
the loan’s interest rate or otherwise),
late charges, and other ancillary sources,
or from selling the servicing rights to a
third party. If Bank A intends to sell the
mortgage loan after it is funded,
pursuant to paragraph 6 of FASB
Statement No. 133, Accounting for
Derivative Instruments and Hedging
Activities, as amended by FASB
Statement No. 149, Amendment of
Statement 133 on Derivative
Instruments and Hedging Activities
(‘‘Statement 133’’), the written loan
commitment is accounted for as a
derivative instrument and recorded at
fair value through earnings (referred to
hereafter as a ‘‘derivative loan
commitment’’). If Bank A does not
intend to sell the mortgage loan after it
is funded, the written loan commitment
is not accounted for as a derivative
under Statement 133. However,
paragraph 7(c) of FASB Statement No.
159, The Fair Value Option for
Financial Assets and Financial
Liabilities (‘‘Statement 159’’), permits
Bank A to record the written loan
commitment at fair value through
earnings (referred to hereafter as a
‘‘written loan commitment’’). Pursuant
to Statement 159, the fair value
measurement for a written loan
commitment would include the
expected net future cash flows related to
the associated servicing of the loan.
Question 1: In measuring the fair
value of a derivative loan commitment
accounted for under Statement 133,
should Bank A include the expected net
future cash flows related to the
associated servicing of the loan?
Interpretive Response: Yes. The staff
believes that, consistent with the
recently issued guidance in FASB
Statement No. 156, Accounting for
Servicing of Financial Assets
VerDate Aug<31>2005
18:07 Nov 08, 2007
Jkt 214001
(‘‘Statement 156’’),1 and Statement 159,
the expected net future cash flows
related to the associated servicing of the
loan should be included in the fair
value measurement of a derivative loan
commitment. The expected net future
cash flows related to the associated
servicing of the loan that are included
in the fair value measurement of a
derivative loan commitment or a written
loan commitment should be determined
in the same manner that the fair value
of a recognized servicing asset or
liability is measured under FASB
Statement No. 140, Accounting for
Transfers and Servicing of Financial
Assets and Extinguishments of
Liabilities, as amended by Statement
156 (‘‘Statement 140’’). However, as
discussed in paragraphs 61 and 62 of
Statement 140, a separate and distinct
servicing asset or liability is not
recognized for accounting purposes
until the servicing rights have been
contractually separated from the
underlying loan by sale or securitization
of the loan with servicing retained.
The views in Question 1 apply to all
loan commitments that are accounted
for at fair value through earnings.
However, for purposes of electing fair
value accounting pursuant to Statement
159, the views in Question 1 are not
intended to be applied by analogy to
any other instrument that contains a
nonfinancial element.
Question 2: In measuring the fair
value of a derivative loan commitment
accounted for under Statement 133 or a
written loan commitment accounted for
under Statement 159, should Bank A
include the expected net future cash
flows related to internally-developed
intangible assets?
Interpretive Response: No. The staff
does not believe that internallydeveloped intangible assets (such as
customer relationship intangible assets)
should be recorded as part of the fair
value of a derivative loan commitment
or a written loan commitment. Such
nonfinancial elements of value should
not be considered a component of the
related instrument. Recognition of such
assets would only be appropriate in a
third-party transaction. For example, in
the purchase of a portfolio of derivative
loan commitments in a business
combination, a customer relationship
intangible asset is recorded separately
from the fair value of such loan
commitments. Similarly, when an entity
purchases a credit card portfolio, EITF
Issue No. 88–20, Difference between
1 Statement 156 permits an entity to subsequently
measure recognized servicing assets and servicing
liabilities (which are nonfinancial instruments) at
fair value through earnings.
PO 00000
Frm 00041
Fmt 4700
Sfmt 4700
63485
Initial Investment and Principal
Amount of Loans in a Purchased Credit
Card Portfolio, requires an allocation of
the purchase price to a separately
recorded cardholder relationship
intangible asset.
The view in Question 2 applies to all
loan commitments that are accounted
for at fair value through earnings.
[FR Doc. E7–21927 Filed 11–8–07; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF DEFENSE
Department of the Navy
32 CFR Part 706
Certifications and Exemptions Under
the International Regulations for
Preventing Collisions at Sea, 1972
Department of the Navy, DoD.
Final rule.
AGENCY:
ACTION:
SUMMARY: The Department of the Navy
is amending its certifications and
exemptions under the International
Regulations for Preventing Collisions at
Sea, 1972 (72 COLREGS), to reflect that
the Deputy Assistant Judge Advocate
General (Admiralty and Maritime Law)
has determined that USS NORTH
CAROLINA (SSN 777) is a vessel of the
Navy which, due to its special
construction and purpose, cannot fully
comply with certain provisions of the 72
COLREGS without interfering with its
special function as a naval ship. The
intended effect of this rule is to warn
mariners in waters where 72 COLREGS
apply.
DATES: This rule is effective November
9, 2007 and is applicable to October 11,
2007.
FOR FURTHER INFORMATION CONTACT:
Commander Gregg A. Cervi, JAGC, U.S.
Navy, Deputy Assistant Judge Advocate
General (Admiralty and Maritime Law),
Office of the Judge Advocate General,
Department of the Navy, 1322 Patterson
Ave., SE., Suite 3000, Washington Navy
Yard, DC 20374–5066, telephone 202–
685–5040.
SUPPLEMENTARY INFORMATION: Pursuant
to the authority granted in 33 U.S.C.
1605, the Department of the Navy
amends 32 CFR part 706. This
amendment provides notice that the
Deputy Assistant Judge Advocate
General (Admiralty and Maritime Law),
under authority delegated by the
Secretary of the Navy, has certified that
USS NORTH CAROLINA (SSN 777) is a
vessel of the Navy which, due to its
special construction and purpose,
cannot fully comply with the following
specific provisions of 72 COLREGS
E:\FR\FM\09NOR1.SGM
09NOR1
]]>Agencies
[Federal Register Volume 72, Number 217 (Friday, November 9, 2007)]
[Rules and Regulations]
[Pages 63484-63485]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-21927]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 211
[Release No. SAB 109]
Staff Accounting Bulletin No. 109
AGENCY: Securities and Exchange Commission.
ACTION: Publication of staff accounting bulletin.
-----------------------------------------------------------------------
SUMMARY: This staff accounting bulletin (``SAB'') expresses the views
of the staff regarding written loan commitments that are accounted for
at fair value through earnings under generally accepted accounting
principles. SAB No. 105, Application of Accounting Principles to Loan
Commitments (``SAB 105''), provided the views of the staff regarding
derivative loan commitments that are accounted for at fair value
through earnings pursuant to Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities. SAB 105 stated that in measuring the fair value of a
derivative loan commitment, the staff believed it would be
inappropriate to incorporate the expected net future cash flows related
to the associated servicing of the loan. This SAB supersedes SAB 105
and expresses the current view of the staff that, consistent with the
guidance in Statement of Financial Accounting Standards No. 156,
Accounting for Servicing of Financial Assets, and Statement of
Financial Accounting Standards No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities, the expected net future
cash flows related to the associated servicing of the loan should be
included in the measurement of all written loan commitments that are
accounted for at fair value through earnings. SAB 105 also indicated
that the staff believed that internally-developed intangible assets
(such as customer relationship intangible assets) should not be
recorded as part of the fair value of a derivative loan commitment.
This SAB retains that staff view and broadens its application to all
written loan commitments that are accounted for at fair value through
earnings.
The staff expects registrants to apply the views in Question 1 of
SAB 109 on a prospective basis to derivative loan commitments issued or
modified in fiscal quarters beginning after December 15, 2007.
DATES: November 5, 2007.
FOR FURTHER INFORMATION CONTACT: Ashley W. Carpenter, Office of the
Chief Accountant (202) 551-5300 or Craig C. Olinger, Division of
Corporation Finance (202) 551-3400, Securities and Exchange Commission,
100 F Street NE., Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The statements in staff accounting bulletins
are not rules or interpretations of the Commission, nor are they
published as bearing the Commission's official approval. They represent
interpretations and practices followed by the Division of Corporation
Finance and the Office of the Chief Accountant in administering the
disclosure requirements of the Federal securities laws.
Dated: November 5, 2007.
Florence E. Harmon,
Deputy Secretary.
PART 211--[AMENDED]
0
Accordingly, Part 211 of Title 17 of the Code of Federal Regulations is
amended by adding Staff Accounting Bulletin No. 109 to the table found
in Subpart B.
Staff Accounting Bulletin No. 109
0
The staff hereby amends and replaces Section DD of Topic 5,
Miscellaneous Accounting, of the Staff Accounting Bulletin Series.
Topic 5: DD (as amended) expresses the views of the staff regarding
written loan
[[Page 63485]]
commitments that are accounted for at fair value through earnings under
generally accepted accounting principles.
Note: The text of SAB 109 will not appear in the Code of Federal
Regulations.
Topic 5: Miscellaneous Accounting
* * * * *
DD. Written Loan Commitments Recorded at Fair Value Through Earnings
Facts: Bank A enters into a loan commitment with a customer to
originate a mortgage loan at a specified rate. As part of this written
loan commitment, Bank A expects to receive future net cash flows
related to servicing rights from servicing fees (included in the loan's
interest rate or otherwise), late charges, and other ancillary sources,
or from selling the servicing rights to a third party. If Bank A
intends to sell the mortgage loan after it is funded, pursuant to
paragraph 6 of FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by FASB Statement No.
149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities (``Statement 133''), the written loan commitment is
accounted for as a derivative instrument and recorded at fair value
through earnings (referred to hereafter as a ``derivative loan
commitment''). If Bank A does not intend to sell the mortgage loan
after it is funded, the written loan commitment is not accounted for as
a derivative under Statement 133. However, paragraph 7(c) of FASB
Statement No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities (``Statement 159''), permits Bank A to record the
written loan commitment at fair value through earnings (referred to
hereafter as a ``written loan commitment''). Pursuant to Statement 159,
the fair value measurement for a written loan commitment would include
the expected net future cash flows related to the associated servicing
of the loan.
Question 1: In measuring the fair value of a derivative loan
commitment accounted for under Statement 133, should Bank A include the
expected net future cash flows related to the associated servicing of
the loan?
Interpretive Response: Yes. The staff believes that, consistent
with the recently issued guidance in FASB Statement No. 156, Accounting
for Servicing of Financial Assets (``Statement 156''),\1\ and Statement
159, the expected net future cash flows related to the associated
servicing of the loan should be included in the fair value measurement
of a derivative loan commitment. The expected net future cash flows
related to the associated servicing of the loan that are included in
the fair value measurement of a derivative loan commitment or a written
loan commitment should be determined in the same manner that the fair
value of a recognized servicing asset or liability is measured under
FASB Statement No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, as amended by
Statement 156 (``Statement 140''). However, as discussed in paragraphs
61 and 62 of Statement 140, a separate and distinct servicing asset or
liability is not recognized for accounting purposes until the servicing
rights have been contractually separated from the underlying loan by
sale or securitization of the loan with servicing retained.
---------------------------------------------------------------------------
\1\ Statement 156 permits an entity to subsequently measure
recognized servicing assets and servicing liabilities (which are
nonfinancial instruments) at fair value through earnings.
---------------------------------------------------------------------------
The views in Question 1 apply to all loan commitments that are
accounted for at fair value through earnings. However, for purposes of
electing fair value accounting pursuant to Statement 159, the views in
Question 1 are not intended to be applied by analogy to any other
instrument that contains a nonfinancial element.
Question 2: In measuring the fair value of a derivative loan
commitment accounted for under Statement 133 or a written loan
commitment accounted for under Statement 159, should Bank A include the
expected net future cash flows related to internally-developed
intangible assets?
Interpretive Response: No. The staff does not believe that
internally-developed intangible assets (such as customer relationship
intangible assets) should be recorded as part of the fair value of a
derivative loan commitment or a written loan commitment. Such
nonfinancial elements of value should not be considered a component of
the related instrument. Recognition of such assets would only be
appropriate in a third-party transaction. For example, in the purchase
of a portfolio of derivative loan commitments in a business
combination, a customer relationship intangible asset is recorded
separately from the fair value of such loan commitments. Similarly,
when an entity purchases a credit card portfolio, EITF Issue No. 88-20,
Difference between Initial Investment and Principal Amount of Loans in
a Purchased Credit Card Portfolio, requires an allocation of the
purchase price to a separately recorded cardholder relationship
intangible asset.
The view in Question 2 applies to all loan commitments that are
accounted for at fair value through earnings.
[FR Doc. E7-21927 Filed 11-8-07; 8:45 am]
BILLING CODE 8011-01-P
