Dodd-Frank’s latest quandary

Author: | Published: 2 May 2012

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires various government agencies to issue rules designed to restructure the US financial regulatory system and restore public confidence in the US financial markets. Proposed rules have been coming forth in increasing volume, including many rules related to securitisation transactions. Some rules have been finalised, while others remain in proposed form. Furthermore, several rules required by Dodd-Frank have not yet been proposed.

Much of the commentary on Dodd Frank's securitisation provisions has focused on the effects of the Act on mortgage-backed and similar asset-backed securities (ABS). Given the historic size of the US mortgage-backed securities market and its role in the financial crisis, Dodd-Frank often addresses these products very specifically. Furthermore, even when not doing so by name, the substance of many rules appears to be designed with mortgage-backed securities in mind.

This has created doubt as to the...