regulators have promised a risk retention release in Q2, but
industry insiders expect a re-proposal not a final
without the ruling taking effect, disparities between the April
and its European equivalent, CRD article 122a, are causing
six US regulators working on the rule, one of the most
controversial aspects of Dodd-Frank, have received 13,000
comments. And US counsel have believe there is disagreement
among the responsible agencies.
in his own capacity at the American Securitization Forum
2012 conference last week (ASF2012), Ryan Richards, a
senior accounting policy analyst with the Board of Governors of
the Federal Reserve, said: I dont think anybody is
really in a position right now to call the exact timing, but
Id be very comfortable in saying its not going to
get done in the first quarter. Its going to be a very
agencies have been meeting at a staff level twice a week.
Commercial Real Estate Finance Councils Mike Flood, who
used to work on Capitol Hill and with the White House, said the
agencies staff are now briefing their respective
agency-heads before regrouping.
securitisation industrys consensus is that the Q2 release
will and should be a re-proposal rather than a
It would be a mistake not to have a
re-exposure because its so complicated, theyve
needed to change so many things, said Jason Kravitt,
Mayer Brown partner and deputy chair of the ASF.
McCutchen partner John Arnholz, speaking at ASF2012, expected a
re-proposal and Flood gave a re-proposal 60/40 odds.
the Feds Richards said: That decision hasnt
been made...its too tough to call right
Walsh, acting chief of the Office of the Comptroller of the
Currency, was also evasive in his ASF2012 keynote, stating:
There is no fixed time.
implied that the final rule was a way off, though. The
old adage if you want it bad youll get it bad
could certainly apply to some of these rules so I think we need
to take the time to get these things in shape, Walsh
Securities and Exchange Commission, Federal Insurance Deposit
Corporation and Department of Housing and Urban Development
declined IFLRs request to comment on the timing because
the rule writing is still in process.
rules on top of American rules
article 122a (which is already in effect) differs in some
fundamental ways from the US proposal. Most notably, the
investor is responsible for monitoring compliance, there are
different risk holding methods, there is no premium capture
cash reserve account requirement, and no exemptions for high
discrepancies are already proving difficult.
is a problem and as an investor Im frequently looking at
transactions where Im trying to get them [the issuer] to
put European retention rules on top of the American retention
rules, said Dominic Swan, head of ABS investments
at HSBC Global Asset Management
speaking at ASF2012.
there isnt a lot of European demand for a deal, then it
becomes impossible to invest, Swan said.
Moor, a securitisation policy advisor with the European Banking
Authority (EBA) which issues guidance on article 122a, said
these discrepancies are something the EBA is concerned
are quite happy with article 122a and the guidance on it, but
we do recognise that we have a harmonisation and convergence
problem, he said at ASF2012 (in his own capacity). Moor
said this is a priority for the EBA and that it is already
speaking with the US agencies.
the EBA perspective we are very open and willing to start
looking into ways to harmonise and try to converge parts of
risk retention, he added.