On October 19, the Fed, as required by the Dodd-Frank Act, issued a report on the potential impact of risk retention on the securitization markets. The report highlights differences between securitizations backed by different types of assets and recommends that these differences be taken into account by the regulatory agencies when developing risk retention requirements. Fed Release. Fed Report.
Month: October 2010
Rating Agency Developments
On October 8, Fitch published updates to three U.S. Public Finance criteria reports: (i) U.S. Local Government Tax-Supported Rating Criteria, (ii) U.S. State Government Tax-Supported Rating Criteria, and (iii) Revenue Supported Rating Criteria. Fitch Release.
On October 13, Moody’s updated its approach to assessing credit risk for business and consumer service companies. Moody’s Release.
Note: Free registration is required for Fitch and Moody’s releases and reports.
FASB Update on Troubled Debt Restructurings
On October 12, FASB issued an Exposure Draft of a proposed Accounting Standards Update to increase transparency in financial reporting about troubled debt restructurings. The update proposes guidance to assist creditors in determining whether a modification of a receivable’s terms meets the criteria to be considered a troubled debt restructuring for purposes of recording an impairment and for disclosure of troubled debt restructurings. FASB Release.
SEC Proposed “Family Office” Definition under Dodd-Frank
On October 12, the SEC proposed a rule to define a “family office,” which would be excluded from the definition of an investment adviser under the Investment Advisers Act of 1940. Family offices are entities established by wealthy families to manage their money and provide tax and estate planning and similar services. Comments to the proposed rule should be submitted by November 18. SEC Release. SEC Proposed Rule
FDIC Guidance on Golden Parachute Applications
On October 14, the FDIC issued a financial institution letter providing guidance on handling applications to make permissible golden parachute payments. The guidance: (i) clarifies the golden parachute application process for troubled institutions, (ii) specifies the type of information necessary to satisfy certification requirements, and (iii) highlights factors considered by staff when determining whether to approve a golden parachute payment. FDIC Guidance.
HUD Proposal to Strengthen Lender Indemnification
On October 8, HUD proposed regulations to strengthen its authority to force lenders to indemnify or reimburse the FHA for insurance claims paid on mortgages that do not meet the agency’s guidelines. HUD seeks to force indemnification for “serious and material” violations of FHA origination requirements by lenders with special authority to insure mortgage loans on FHA’s behalf. HUD Release.
SEC Proposes Rules to Mitigate Conflicts of Interest for Security-Based Swaps
On October 13, the SEC proposed rules, known as Proposed Regulation MC, to mitigate conflicts of interest for security-based swap clearing agencies, security-based swap execution facilities, and national securities exchanges that post security-based swaps or make them available for trading, by requiring them to adopt ownership and voting limitations and certain governance requirements. Comments to the rule should be submitted within 30 days after publication in the Federal Register. SEC Release.
SEC Interim Rule on Reporting for Security-Based Swaps
On October 13, the SEC adopted an interim final temporary rule, as required by the Dodd-Frank Act, requiring certain swaps dealers and other parties to report any security-based swaps entered into before July 21, the terms of which had not expired as of that date. The rule will remain in effect until the earlier of the operative date of the permanent recordkeeping and reporting rules for security-based swap transactions to be adopted by the SEC or January 12, 2012. Comments to the rule should be submitted within 60 days after publication in the Federal Register. SEC Interim Rule.
SEC Proposed Rules on Issuer Review of Assets in ABS Offerings
On October 13, the SEC proposed new rules, as required by the Dodd-Frank Act, with respect to an issuer’s review of assets in ABS offerings. The SEC proposed: (i) a requirement that any issuer registering an offering or sale of ABS performs a review of the underlying assets, (ii) amendments to Item 1111 of Reg AB requiring an ABS issuer to disclose the nature of its review of the underlying assets and its findings and conclusions, and (iii) a requirement that issuers or underwriters of ABS disclose information as to third-party due diligence providers. Comments on the proposed rules should be submitted by November 15. SEC Proposed Rule.
FDIC Proposed Rule on Dodd-Frank Resolution Authority
On October 12, the FDIC issued a notice of proposed rulemaking for a rule clarifying how the FDIC would treat certain creditor claims under the new liquidation authority, established under the Dodd-Frank Act, for financial companies whose insolvency would pose a significant risk to the financial stability of the United States. Comments are requested on: (i) specific issues related to creditor claims (due within 30 days of publication of the NPR in the Federal Register) and (ii) broader questions to inform future rulemaking on orderly liquidation by the FDIC under the Dodd-Frank Act (due within 90 days of publication of the NPR in the Federal Register). FDIC Release. FDIC Proposed Rule. FDIC Board Memorandum.