Accounting change not meant to shock: SEC's Cox

WASHINGTON (Reuters) - An accounting change that could force banks to bring trillions of dollars of off-balance sheet transactions back on their books will be implemented in a way that will not create unnecessary shocks, the chairman of the U.S. Securities and Exchange Commission said on Thursday.

"We want to make sure that the discussion of this and the implementation of this is done in such a fashion that the market can absorb it and it does not create any unnecessary shocks," SEC Chairman Christopher Cox told a Congressional panel.

Accounting rule-maker the Financial Accounting Standards Board is working on a proposal to eliminate certain off-balance sheet entities called qualified special purpose entities (QSPEs) that are used to pool debt such as car loans and mortgages.

The change would apply to current and new QSPEs and would require banks to figure out which party has to recognize the off-balance sheet items.

That has raised concerns that banks and other financial firms like mortgage companies Freddie Mac and Fannie Mae would have to raise billions in capital at a time when markets are tight.

At a House Financial Services Committee hearing to examine the future of financial regulation, Cox tried to reassure lawmakers that the change was not being rushed.

"It's wrong to say that this is being fast tracked. The likely scenario is that there will be a period for public comment, consideration," Cox said. "In terms of effective date that they are considering in that proposal, we are talking years into the future."

The SEC has statutory authority to set accounting standards, but for the most part will defer to the FASB and respect their decisions.

FASB plans to issue the proposal in August. It is unclear when and how companies will have to implement the changes.

(Reporting by Rachelle Younglai; Editing by Andre Grenon)