Responding to requests by the American Bankers Association and other stakeholders, the Financial Accounting Standards Board today approved specific projects to amend existing guidance on derivative accounting.
Among the FASB proposals is a short-term project that addresses derivatives that hedge the fair value of debt securities classified as Held to Maturity, or HTM. Following the failure of Silicon Valley Bank in 2023, accounting for HTM securities came under criticism because of the current wording in generally accepted accounting principles, or GAAP, that effectively discourages such risk management activities.
Given the short-term nature of the project, ABA staff believe that a formal exposure draft will be issued sometime in the second quarter, with release of a final standard by the end of the year.
