) -- 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

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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.

Yet the new burden will certainly affect the way banks lend and operate, since capital is king these days in the financial world.

According to an S&P report on Sept. 8,


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anticipates bringing $159 billion worth of assets onto its books, BofA $150 billion,

JPMorgan Chase

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$130 billion,

Wells Fargo

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$109 billion,

Capital One

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$45 billion and

American Express

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$30 billion. The assets represent anywhere from 6.4% of on-balance sheet items at JPMorgan to 26% at Capital One, a big credit-card lender.

The data, based on second-quarter reports, notes that

Fannie Mae



Freddie Mac


will also face a "significant impact" from the rule change.

"As these early disclosures make clear, the changes to financial institutions' asset, debt, and capital balances on their financial statements could be quite meaningful," S&P analysts said. "In some cases, the allowance for loan losses will have to be increased to cover the additional loans, thereby hurting capital levels."

Since the lending environment is already strained and investors are still concerned about banks' capital woes, regulators seem poised to give banks some breathing room. The Federal Deposit Insurance Corp. is considering an approach that would give banks a year to absorb the assets. The agency is working with the Office of the Comptroller of the Currency,

Federal Reserve

and Office of Thrift Supervision, to garner more information about the types of exposure financial firms hold off the books.

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The Fed already knows a good deal, having scrutinized the assets of the country's 19 largest banks as part of its

stress tests. The $63 billion in capital shortfalls identified by the Fed at BofA, Wells Fargo, Citi,

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Fifth Third

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Regions Financial

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, took into account off-balance sheet items as well -- making it more clear why

Wells Fargo was required to raise as much money as it did.

Wells held more assets off-balance sheet than on it at June 30, although all of that $1.8 trillion worth of exposure will not necessarily have to be placed on the books. Furthermore, the firm plans to sell at least $87 billion worth of residential mortgages held in off-balance sheet vehicles called qualified special purpose entities, or QSPEs.

However, some

assets may not be easy or economical to sell -- particularly any lingering subprime debt, commercial mortgages, or structured investment vehicles.

The problem is evident in a bundle of loans packaged into an SIV by


in 2006, which Wells inherited in its acquisition of the bank. The $1.3 billion collateralized debt obligation, or CDO, was backed by more than seven million square feet of commercial real estate, and domiciled in the Cayman Islands. The loans were backed by property mainly located in California, Florida and other states throughout the Sunbelt that have suffered mightily from the real-estate bust.

In a move that was not atypical of the structured-finance boom, the SIV was made "substitutable," meaning that assets could be transferred in and out and replaced by new ones. New assets had to meet certain criteria, and the overall makeup of new debt had to remain within certain benchmarks.

Yet the most troubling aspect of the CDO is the information that's not available. It's unclear who owns the vehicle, what assets are inside of it, how the loans have performed, or whether it has lost or earned money. It is also unclear how much exposure Wells Fargo, which acquired Wachovia last year, has to the structured investment vehicle -- if any at all.

A Wells spokeswoman passed along a query regarding the SIV to Wells' investment banking department, which did not provide further information.

The industry is now facing a tidal wave of delinquencies and losses from commercial real estate holdings on the books, making an opaque off-balance sheet asset like Wachovia CRE-CDO 2006-1 particularly troubling. Assets initially placed within the CDO were in states that have seen some of the most severe real-estate value declines in the country. Moody's and Fitch downgraded all or some of its tranches by at least one notch in the spring. Those agencies and S&P still hold relatively high ratings on the debt, whose top tranches were initially rated AAA.

"It's not an isolated thing," says Edward J. Grebeck, a debt-market strategist and CEO of Tempus Advisors, who has worked with structured vehicles at JPMorgan and

General Electric's

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GE Capital division. "It's the rule rather than the exception."

Grebeck says outside investors could have purchased the Wachovia assets, removing all of the company's liability except for a $35.75 million, or 2.75%, preferred stake. George Prost, who trades debt securities for the fixed-income firm R. Seelaus & Co., identified at least five buyers of other tranches. He notes that even if Wachovia held onto the entire CDO, it's "still not enough to bring down the bank."

If regulators do allow Wells and other firms with large off-balance sheet exposure an additional year to unwind such assets or build capital against their risk, it may not even make a dent.

-- Written by Lauren Tara LaCapra in New York