Financial asset securitization investment trust
A financial asset securitization investment trust (FASIT) was a type of special purpose entity used for securitization of any debt and issuance of asset-backed securities, defined under section 1621 of the Small Business Job Protection Act of 1996,[1] and repealed under section 835 of the American Jobs Creation Act of 2004. They were similar to a Real Estate Mortgage Investment Conduit (REMIC) but could also securitize non-mortgage debts, such as automobile loans and credit card debt.
In the Enron scandal, Enron used FASITs to avoid Subpart F rules on foreign income.[2] The United States Congress Joint Committee on Taxation staff, in their investigation of the Enron scandal, recommended that FASIT rules be repealed as they were "not widely used in the manner envisioned by the Congress and thus have failed to further their intended purposes" and because of the "abuse potential inherent in the FASIT vehicle".[3]
References
- ↑ Ferst, Joseph L.; Miyashiro, Milton K. (1999). "Federal Income Taxation of REMICs and CMBS". The Handbook of Mortgage Backed Securities (2nd ed.). Fabozzi and Jacob. p. 441.
- ↑ Niskanen, William A. (2007). After Enron: Lessons for Public Policy. Rowman & Littlefield. pp. 306–307. ISBN 978-0-7425-4434-5.
- ↑ Report of Investigation of Enron Corporation and Related Entities Regarding Federal Tax and Compensation Issues, and Policy Recommendations, United States Congress Joint Committee on Taxation, February 2003, p. 33
- Levy, William; Mayer Brown & Platt (May 16, 1997), Financial Asset Securitization Investment Trusts: An Overview with Implications for Securitization Transactions
See also
- Real Estate Mortgage Investment Conduit (REMIC)