On December 7, in accordance with the Dodd-Frank Act, the CFTC and the SEC proposed rules and interpretative guidance under the Commodity Exchange Act to further define the terms “swap dealer”, “security-based swap dealer”, “major swap participant”, “major security-based swap participant” and “eligible contract participant”. Comments must be submitted within 60 days of publication in the Federal Register. SEC Release.
Month: December 2010
Order Compelling Deutsche Bank to Produce Documents Previously Provided to NY Attorney General Affirmed
On November 19, 2010, the Appellate Division of the New York Supreme Court, Fourth Department, affirmed an order compelling Deutsche Bank Securities, Inc. to produce to M&T Bank Corp. approximately 1.7 million pages of documents it previously produced to the New York State Attorney General concerning the packaging and sale of RMBS. Deutsche argued that discovery of documents concerning RMBS not underlying the CDOs at issue in the suit with M&T should not be required. The New York appellate court rejected that contention, stating that the discovery rules in New York are “to be interpreted liberally in favor of disclosure.” Decision.
Ill. Lawsuit Claiming Misrepresentations in Multiple RMBS Transactions Must Be Severed Into Multiple Actions
On November 29, 2010, Federal District Court Judge Milton I. Shadur sua sponte issued a Memorandum Order stating that if the action brought by the Federal Home Loan Bank of Chicago against 53 different named defendants arising out of 34 RMBS purchases “is to proceed in this federal court, it must do so through multiple law suits . . . .” The defendants recently removed the case from the Cook County, Illinois Circuit Court to the United States District Court for the Northern District of Illinois. FHLBC’s counsel stated at a November 30 hearing that it will ask the judge to remand the case to state court. Court Order. Hearing Transcript.
Rating Agency Developments
On November 30, Fitch updated its methodology for ABCP. Fitch Release.
On November 23, Moody’s updated its shipping loan ABS methodology. Moody’s Methodology.
On November 22, DBRS released its swap and legal criteria for Canadian structured finance transactions. DBRS Swap Criteria. DBRS Legal Criteria.
Note: Free registration is required for Fitch and Moody’s releases and reports.
BOE Eligibility Requirements for RMBS and Covered Bonds
On November 30, the Bank of England issued a market notice establishing eligibility requirements for RMBS and covered bonds backed by residential mortgages to be delivered as collateral to the Bank. The implementation of the new requirements varies by asset class and spans 2011. BOE Market Notice.
Public Information on Fed Programs
On December 1, the Fed announced that it will be providing transaction-level details on individual credit and other transactions conducted by the Fed to stabilize the financial markets, from December 1 2007, to July 21, 2010. Fed Release. Fed Transaction Report.
FHFA Proposed Rule on Voluntary Bank Mergers
On November 22, the Federal Housing Finance Authority proposed a rule that would establish procedures to enable the voluntary merger of Federal Home Loan Banks. Comments on the proposed rule must be submitted within 60 days after publication in the Federal Register. FHFA Release. Proposed Rule.
Bair Testimony on Mortgage Servicing Deficiencies
On December 1, FDIC Chairman Bair testified at the Senate Banking Committee hearings on Problems in Mortgage Servicing from Modification to Foreclosure. In her statement, Chairman Bair (i) provided background on the robo-signing and related foreclosure documentation problems as well as other deficiencies in the mortgage servicing process, (ii) discussed the FDIC’s efforts to address servicing problems, and (iii) indicated that she believes the newly-established Financial Stability Oversight Council can play a central role in facilitating broad agreements among the major stakeholder groups. Bair Speech.
Fed Issues Real Estate Appraisal Guidelines
On December 2, the federal financial regulatory agencies issued final supervisory guidance on sound practices by financial institutions for real estate appraisals and evaluations. Press Release. Guidelines.
SEC Whistleblower Office Deferred
On December 2, the SEC announced that it would defer the creation and staffing of the whistleblower office and four other offices called for under the Dodd-Frank Act. SEC Release