On March 15, Senator Dodd released proposed financial stability legislation which would create agencies aimed at policing threats to the economy, preserving banks in good health, and giving shareholders a voice on executive compensation. It would also create an independent consumer protection watchdog at the Fed, implement advanced warning systems and measures to end “too big to fail”, and increase transparency, among other things. Proposed Legislation. Summary of Proposed Legislation.
Month: March 2010
Proposed Covered Bond Legislation
On March 18, the Garrett-Kanjorski-Bacchus United States Covered Bond Act was introduced in the House of Representatives. The legislation is designed to facilitate a robust covered bonds market in the U.S. and establish regulatory oversight of covered bond programs. Representative Garrett Press Release. Orrick Client Alert.
IIFM and ISDA Launch Islamic Finance Master Agreement
On March 1, the International Islamic Financial Market (IIFM) and ISDA launched the Tahawwut (Hedging) Master Agreement, the first globally-standardized documentation for privately negotiated Islamic hedging products. ISDA Release.
Rating Agency Developments
On March 10, DBRS published its methodology for rating income trusts. DBRS Release.
On March 11, Fitch published a report evaluating the key components and drivers of Basel II risk-based capital ratios. Fitch Release. Fitch Report.
Note: Free registration is required for Fitch releases and reports.
ISDA Market Review
On March 8, ISDA published an Independent Amount Whitepaper as well as a Market Review of OTC Bilateral Collateralization Practices, which are designed to provide a better understanding of current market collateralization and provide recommendations for market participants. ISDA Release.
Stricter Stress Tests for U.K. Banks
On March 10, the Financial Services Authority (FSA) published its Financial Risk Outlook and indicated that U.K. banks will be required to perform stricter stress tests in 2010. FSA Financial Risk Outlook.
FDIC Closes Sale of RMBS-Backed Notes
On March 12, the FDIC closed on a sale of approximately $1.81 billion of notes backed by 103 non-agency RMBS from seven failed bank receiverships. The FDIC retained an equity interest in each series, and provided a guaranty of the notes. FDIC Release.
FDIC Securitization Safe Harbor Extension
On March 11, the board of directors of the FDIC approved a final rule extending the safe harbor provided by the FDIC with respect to securitizations and participations until September 30.
All securitizations and participations issued on or before September 30 (including securitizations by revolving trusts issued on or before September 30) will fall under the safe harbor so long as the securitizations or participations would satisfy the conditions for sale accounting treatment under GAAP as in effect prior to November 15, 2009, and would otherwise comply with existing Section 360.6. FDIC Release. FDIC Rule.
Monthly TALF Funding Requests
The graph below displays the monthly progression of TALF funding requests for non-CMBS asset classes. For individual graphs showing the monthly requests for each asset class, please click here.
Rating Agency Criteria and Methodology Updates
On March 1, S&P published its methodology and assumptions relating to the surveillance of U.S. RMBS transactions backed by small-balance commercial loans. S&P Release.
On March 4, S&P revised its assumptions for assessing European insurance hybrid capital instruments subject to the EU’s “Directive On The Taking-Up And Pursuit Of The Business Of Insurance And Reinsurance” (Solvency II). S&P Release.
On March 2, S&P released updated assumptions for the interest rate scenarios for its U.S. insurance risk-based capital model. S&P Release.
On March 3, Fitch released updated criteria related to the rating of future flow securitizations in emerging markets. Fitch Release.
On March 2, Fitch released updated criteria with respect to the liquidity risks of covered bond programs. Fitch Release.
Note: Free registration is required for S&P and Fitch releases and reports.