Rating Agency Developments

On April 20, Fitch published its updated criteria for rating U.S. auto loan ABS transactions. Fitch Release.

On April 20, DBRS released methodologies for a number of types of Canadian structured finance transactions. DBRS Methodologies.

On April 19, Fitch published its criteria for partial credit guarantees in emerging market transactions. Fitch Release.

On April 18, S&P updated its global methodologies for rating ABCP issued by multi-seller conduits by introducing new criteria for classification and timing of new-seller transaction reviews. S&P Release.

Note: Free registration is required for Fitch and S&P releases and reports.

Financial Industry Breakfast Briefing – Credit Risk Retention NPR

April 29, 2011 – A panel of Orrick lawyers will discuss recently proposed rules to implement the credit risk retention requirements of section 15G of the Securities Exchange Act of 1934, as added by section 941 of the Dodd-Frank Act. Click here for more information and to RSVP. Click here for Orrick’s White Paper on the Proposed Rules.

New Derivative Suit Filed Against Current and Former Citigroup Directors in S.D.N.Y.

A Citigroup shareholder filed a derivative complaint against several current and former individual directors alleging that they breached their fiduciary duties to the company by failing to implement and maintain adequate risk management procedures in connection with the company’s residential mortgage business. The complaint also alleges that the individual directors failed to maintain sufficient resources, processes, and controls to adequately manage the company’s foreclosure processing business. The complaint seeks disgorgement of profits and benefits and restitution from the individual defendants, an order compelling Citigroup to hold a shareholder vote on various corporate governance issues, as well as equitable and injunctive relief. Complaint.

FSA Implementation of the Remuneration Code

On April 19, the Financial Services Authority issued guidance to banks, building societies and Capital Adequacy Directive investment firms on compliance with the Remuneration Code, as modified and extended on January 1. The FSA issued guidance on general compliance with the Remuneration Code’s compensation rules as well as on varying the proportionality tier of a firm. The FSA is seeking consultation on its general guidance by May 18. General Compliance Guidance. Self-Assessment of Compliance for Tier 2. Self-Assessment of Compliance for Tiers 3 and 4. Retention Periods. Guaranteed Variable Remuneration. FAQ on the Remuneration Code. Proportionality Tier Guidance.

ESMA Discussion Paper on Implementation of AIFMD

On April 15, the European Securities and Markets Authority issued a discussion paper on the implementation of Article 3 of the Alternative Investment Fund Managers Directive. The paper specifies ESMA‘s proposed approach regarding: (i) the calculation of assets under management to indentify funds under the authority of the Directive; (ii) the influence of leverage and cross-holding on such a determination; (iii) registration requirements; and (iv) procedures for smaller fund managers to “opt in” to the Directive. Comments must be submitted by May 16. ESMA Paper.

CFTC Proposed Rules on Margin Requirements for Uncleared Swaps

On April 12, pursuant to Section 731 of the Dodd-Frank Act, the CFTC proposed rules establishing margin requirements for uncleared swaps for swap dealers and major swap participants. Comments must be received within 60 days after publication in the Federal Register. Proposed Rule.

Fed Proposed Rule on Mortgage Underwriting Standards under Reg Z

On April 19, pursuant to Section 1411 of the Dodd-Frank Act, the Fed released a proposed rule under Regulation Z requiring creditors to determine a consumer’s ability to repay a mortgage before making a loan and to establish minimum mortgage underwriting standards. The proposed rule provides creditors four options to comply with the “ability-to-repay” requirement of Section 1411: (i) general compliance with underwriting standards; (ii) “qualified mortgages” with creditor protections from liability; (iii) balloon-payment mortgages for rural or underserved areas; and (iv) refinancing of risky “non-standard mortgages” into stable “standard mortgages”. Comments must be submitted by July 22. Fed Release. Proposed Rule.

Fed Requested Information on Studies Regarding Resolution of Financial Companies under Bankruptcy Code

On April 21, the Fed issued a request for public information and comment on two bankruptcy-related studies required under the Dodd-Frank Act. One study will focus on the resolution of financial companies in Chapter 7 or Chapter 11 bankruptcy, and the other will focus on international coordination of the resolution of systemically important financial companies under the Bankruptcy Code and applicable foreign law. Comments must be submitted within 30 days after publication in the Federal Register. Fed Release. Fed Notice and Request for Information.