Saint Casimirs Savings Bank
From: John Sabol Jr [mailto:jsabol@stcasimirssavbank.com]
Sent: Monday, June 28, 2004 1:03 PM
To: Comments
Subject: Consolidated Reports of Condition and Income, 3064-0052
Saint Casimirs Savings Bank
2703 Foster Avenue
Baltimore, Maryland 21224-3898
June 23, 2004
Steven F. Hanft
Clearance Officer, Legal Division, Room MB-3046
Federal Deposit Insurance Corporation
550 17th Street, NW.
Washington, DC 20429
Re: Consolidated Reports of Condition and Income, OMB Number: 3064-0052
Mr. Hanft or To Whomever It May Concern:
I am writing to you
to comment on one of the two proposed instructional changes that will
affect how
institutions report certain information
in the Call Report and TFR. In particular, I think that the proposal
to change the reporting requirements for “when-issued” securities
from settlement date accounting to trade date accounting will cause problems
in implementation, and require an unnecessary additional burden for the
institutions that purchase or sell them.
I think this proposal
will require an unnecessary additional burden and cause problems in
order
to implement it because of several reasons.
The primary reason is that at the time we agree to purchase a “when-issued” security,
the trade date, sometimes we will not know the exact pool number or principal
amount since the factor can change, the CUSIP, or the exact size of the
pool until the settlement date. Sometimes on “when issued” securities
if a payment is received on them or the principal balance changes between
the trade date and settlement date, it can then in turn change the coupon
rate of the security. All of these things mentioned above are somewhat
common occurrences when dealing with “when-issued” mortgage-backed
securities.
Also, in reality
the security is not truly purchased until the settlement date, since
that is the
date the actual transfer or exchange of funds
for the security takes place. The proposal to change the reporting requirements
for “when-issued” securities from settlement date accounting
to trade date accounting will require that additional general ledger
liability accounts be set up for the purchase of “when issued” securities
in order to book the security on the trade date and actually settle on
it on the settlement date.
Overall, due to the
reasons mentioned in the 2 preceding paragraphs, the proposal to change
the
reporting requirements for “when-issued” securities
from settlement date accounting to trade date accounting will require:
the addition to most institutions general ledgers several additional
accounts, numerous adjustments to the various balances and records related
to the security between the trade date and the settlement date, and impose
what I think is an unnecessary additional burden on many financial institutions
in order to implement it. Inevitably, in order to make all these new
adjustments, and transfers between new general ledger accounts, the implementation
of this proposal will result in additional bookkeeping errors.
So I hope you will
discontinue going any further with the proposal to change the reporting
requirements
for “when-issued” securities
from settlement date accounting to trade date accounting as mentioned
in OMB Number: 3064-0052. If you have any additional questions or need
anything else, we can be reached by telephone at 410-276-0894 or the
address listed at the top of this letter. Thank you for consideration
of our comments in regards to this proposal.
Sincerely,
John P. Sabol, Jr.
Controller
St. Casimirs Savings Bank
Certificate #32327
E-mail: jsabol@stcasimirssavbank.com
&
Ronald D. Jasion
President
St. Casimirs Savings Bank
Certificate #32327
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