Banks Brace For Off-Balance Blow

NEW YORK (TheStreet) -- Banks are sweating out the last few months before a major accounting rule takes effect next year, awaiting word from regulators on whether they must move trillions of dollars worth of assets onto their balance sheets all at once or more gradually.

It makes a difference because those off-balance sheet assets -- which include credit-card debt, commercial real estate loans, mortgage loans and special purpose vehicles -- will require additional capital reserves. On Wednesday evening, the American Securitization Forum will host a seminar in New York to discuss how the rule change will affect banks and the securitization industry.

Banks have avoided saying precisely how transitioning from FAS-140 to FAS-166 and 167 will affect first-quarter 2009 results, in part because there hasn't been a clear directive from Washington.

"Whatever our existing policy is at the point in time would be what we would be following," Bank of America (BAC Quote) CFO Joe Price said during the company's earnings call, in response to a question about how much capital the bank would have to hold against the assets.

Equity analysts haven't expressed much concern about the rule change, with one damaging -- but apparently misinformed -- report on BofA's troublesome credit-card receivables being hastily retracted in July. On Tuesday, Rochdale Research analyst Richard Bove highlighted Bank of America's impending inclusion of $150 billion in assets on its balance sheet as an "issue," but added that it's "not a problem yet."

"It is unclear what the risk-weighted value of these assets will be and, therefore, what the impact on the company's capital ratios might be," Bove said.