SIFMA Submits Comments on Credit Risk Retention Proposed Rule

SIFMA has filed two comment letters to the Office of the Comptroller of the Currency ("OCC"), the SEC, the Board of Governors of the Federal Reserve System ("FRB"), the Federal Deposit Insurance Corporation ("FDIC"), the Federal Housing Finance Agency ("FHFA"), and the U.S. Department of Housing and Urban Development ("HUD") in response to the re-proposed rulemaking on credit risk retention.One letter was filed jointly with the American Bankers Association ("ABA"), the ABA Securities Association, and The Financial Services Roundtable ("FSR"), and the other letter presents the views of investor members of SIFMA's Asset Management Group ("AMG").

Both letters express support for a number of aspects of the rule, such as the alignment of the definition of "qualified residential mortgage" with the definition of "qualified mortgage." Additionally, both letters support the elimination of the "premium capture" provisions of the original rule, which the comment groups stated would have made securitization uneconomical for many issuers by substantially eliminating the profitability of securitization transactions and incentives to securitize. Both letters express concern, however, that the re-proposed risk retention rules do not work for collateralized loan obligations and would impede the capacity of the CLO market as a means to support corporate lending.

Overall, SIFMA stated that the re-proposed rules should be further revised to address the suggestions in its comment letters.

See: SIFMA Press Release; SIFMA, ABA, ABA Securities Association and FSR Letter; SIFMA AMG Letter. See also: SFIG Letter to Agencies on Credit Risk Rentention Re-Proposal. Related news: Agencies Propose Rule Change Regarding Credit Risk Retention of Securitized Assets (Fed. Reg.) (October 18, 2013).