What is Financial asset securitization investment trust?

This is a type of financing tool that was created in 1996 and designed to be used for the securitization of non-mortgage assets. Securitization occurs when an illiquid asset is turned into a security.

Where have you heard about Financial asset securitization investment trust?

They were used in the Enron scandal of 2001. In a bid to avoid tax rules known as Subpart F regulations, the US corporation used Financial asset securitization investment trust (FASITs) among a number of other special purpose entities.

What you need to know about Financial asset securitization investment trust.

They work in a similar way to Real Estate Mortgage Investment Conduits, but can also securitize non-mortgage debts, such as credit cards and car loans. This means they offer more flexibility and are often seen as an attractive investment vehicle. However, in an investigation following the Enron scandal, the US Congress Joint Committee on Taxation found that FASIT rules should be repealed because they were not being used for their intended purpose. FASITs were eventually repealed under the American Jobs Creation Act of 2004.

Find out more about Financial asset securitization investment trust.

To understand FASITs, it helps to understand asset-backed securities. See our guide for more information.