JOINT RELEASE |
Board of Governors of the Federal Reserve
System |
Six federal agencies today issued a notice revising a proposed rule
requiring sponsors of securitization transactions to retain risk in those
transactions. The new proposal revises a proposed rule the agencies issued
in 2011 to implement the risk retention requirement in the Dodd-Frank Wall
Street Reform and Consumer Protection Act.
This proposal is being issued
jointly by the Board of Governors of the Federal Reserve System, the Department
of Housing and Urban Development, the Federal Deposit Insurance Corporation, the
Federal Housing Finance Agency, the Office of the Comptroller of the Currency,
and the Securities and Exchange Commission. As provided under the statute, the
Secretary of the Treasury, as Chairperson of the Financial Stability Oversight
Council, played a coordinating role in the rulemaking. The rule would provide
asset-backed securities (ABS) sponsors with several options to satisfy the risk
retention requirements. The original proposal generally measured compliance with
the risk retention requirements based on the par value of securities issued in a
securitization transaction and included a so-called premium capture
provision. The agencies are now proposing that risk retention generally be
based on fair value measurements without a premium capture provision.
As
required by the Dodd-Frank Act, the proposal would define "qualified residential
mortgage" (QRM) and exempt securitizations of QRMs from risk retention.
The new proposal would define QRMs to have the same meaning as the term
qualified mortgages as defined by the Consumer Financial Protection
Bureau. The new proposal also requests comment on an alternative
definition of QRM that would include certain underwriting standards in addition
to the qualified mortgage criteria.
Similar to the original
proposal, under the new proposal, securitizations of commercial loans,
commercial mortgages, or automobile loans of low credit risk would not be
subject to risk retention. Further, the rule would recognize the full
guarantee on payments of principal and interest provided by Fannie Mae and
Freddie Mac for their residential mortgage-backed securities as meeting the risk
retention requirements while Fannie Mae and Freddie Mac are in conservatorship
or receivership and have capital support from the U.S. government. This
provision also is unchanged from the original proposal.
The agencies are
requesting comment on the revised proposed rule by Oct. 30, 2013.