Fitch Comments on FDIC Interim Final Rule for Bank-Issued ABS.

NEW YORK -- Earlier today, the FDIC approved an Interim Rule addressing its treatment (as conservator or receiver) of financial assets transferred by an insured depositary institution in connection with an asset-backed securitization or participation. In Fitch Ratings' view, this resolution sufficiently clarifies uncertainty regarding the treatment of such assets that arose due to pending changes to accounting rules regarding off-balance sheet securitizations.

As a result of today's action by the FDIC, bank sponsored securitizations issued prior to March 31, 2010 will be eligible to achieve ratings from Fitch higher than those of the originating entity.

The Interim Rule, which amends 12 C.F.R. - 360.6 (the Securitization Rule) allows for a 'transitional safe harbor' for securitizations issued prior to March 31, 2010. As stated, the rule effectively 'grandfathers' existing transactions and those issued prior to March 31, 2010, if the transactions would have complied with the existing Securitization Rule, including that the transactions would qualify as a GAAP sale in effect for reporting periods prior to Nov. 15, 2009.

In December 2009, the FDIC intends to publish a Notice of Proposed Rulemaking to amend section 360.6 to address treatment of participations and securitizations issued after March 31, 2010. Fitch will review this notice once it has been made available and will comment upon how this will affect ratings on issuance taking place after the effective date.

Fitch believes the Interim Rule effectively addresses a key concern that results from existing transactions losing GAAP sale status following implementation of the new accounting rules. Prior to today's clarification, the comfort previously provided by the FDIC - that it would not seek to recover financial assets transferred in connection with a securitization or participation - had been jeopardized by SFAS 166 as one of the preconditions of the Securitization Rule was that the transfer qualify as a sale under GAAP provisions.

For all proposed transactions going forward, Fitch will review the transaction structure, documents, and opinions to determine whether the securitization ratings can be de-linked sufficiently from those of the seller or originating institution.

Additional information is available at 'www.fitchratings.com'.

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