Bank Regulation on Securitization

Due to the passing of the Dodd-Frank Bill it is clear that tighter rules for securitization are right around the corning. Many agencies are concerned an uneasy about this new legislation. At worst, government efforts to rein in issuers of asset-backed securities could produce three separate regulations, each with its own elements. While the three rules would all largely do the same thing — strengthening disclosure and requiring issuers to retain 5% of the credit risk from a securitization — they have significant differences. A 5% requirement will cause for Bank pricing to increase and will be passed on to the consumer as a trickle down effect. In an interview Cristeena Naser, a senior counsel for the American Bankers Association said, “When there are all these balls up in the air, you can’t expect businesses to make systems changes … until the dust settles. They need to be coordinated. Nobody is saying that we don’t need changes to the process, but we need a uniform change to allow businesses to make decisions.” Regulators have stated that there is coordination across agencies however each regulator the FDIC and SEC are pursuing separate paths because they each deal with specialized jurisdictions. “Every regulator has jurisdiction over certain areas, and we have jurisdiction over the receivership rules. The SEC has jurisdiction over the securities rules,” said Michael Krimminger, the deputy to the FDIC chairman for policy. “Just because someone comes out first with a rule and someone comes out second with a rule …Continue Reading