The SEC’s Investor Advisory Committee wants increased regulatory disclosures in the sector. However, an SEC commissioner questioned the utility of the proposal.
The ruling partially lifts the cloud surrounding a 2015 ruling over the valid-when-made doctrine, providing banks with legal arguments to defend their securitization trusts against state usury laws.
Federal regulators have delayed their review of risk-retention requirements until next year. Also, most regulatory actions planned for MBS and ABS fall into the “long-term” category.
A longer statute of limitation and increased disclosure requirements could help attract long-term investors in the MBS and ABS market, industry experts recommend.
The SEC’s Office of Credit Ratings is exploring how it can address conflicts of interest in ratings of MBS and ABS. An increase in performance-related disclosures and boosting unsolicited ratings are being considered.
The SEC is facing pressure to address “ratings shopping” in the MBS and ABS markets. Big rating services are not keen to switch from the issuer-pays model.
Banks will no longer have to meet extensive disclosure requirements for their MBS deals to receive investor-friendly protections. The change was met with criticism from an Obama appointee to the FDIC’s board.