Risk-retention requirements for the majority of MBS and ABS sectors were in effect by the end of December, and industry participants have largely adjusted to them, according to analysts. The Dodd-Frank Act generally requires sponsors of ABS, non-agency MBS and commercial MBS to retain at least 5.0 percent of each deal. The retention requirements for residential mortgages took effect at the end of 2015, though most deals have been backed completely by qualified mortgages, which makes them exempt from risk retention. Other asset types have...
Industry observers and groups expressed support this week for President Trump’s move to put the Dodd-Frank Act under the microscope, with an eye toward scaling back its regulatory burden and possibly replacing at least parts of it with more pro-market reforms. Late last week, Trump signed an executive order that directs the Treasury secretary to consult with the heads of the agencies that comprise the Financial Stability Oversight Council, review the current regulatory structure for the U.S. financial system, and report back in 120 days. The order also lays...
The average daily trading volume in agency MBS increased to $229.8 billion during January, the second best reading of the past year, and a sign that liquidity is improving, thanks in part to higher interest rates. According to figures compiled by the Securities Industry and Financial Markets Association, the January reading was better than the daily trading averages posted for the past four years, which ranged from a low of $178.0 billion in 2014 to a high of $222.8 billion in 2013. Agency trading volumes peaked...
Swap-margin posting requirements established by federal regulators are set to take effect on March 1. The Structured Finance Industry Group is leading a push for delayed implementation as securities issuers are having trouble determining how to comply with the standards. The swap-margin rules were required by the Dodd-Frank Act and drafted in 2015 by federal banking regulators and the Commodity Futures Trading Commission. Unlike requirements set by European regulators, the U.S. rules lack a general exemption from compliance for securitization special-purpose vehicles. Securitization SPVs issue various types of MBS and ABS. SFIG noted...
Analysts at DBRS anticipate some notable changes in the residential mortgage securitization market this year, mostly as a result of expected higher interest rates. “Despite a healthy housing market recovery, post-crisis non-agency RMBS issuance has remained stagnant for several reasons,” said Quincy Tang, managing director of RMBS structured finance, in a new research report issued early this week. In addition to the dominance of Fannie Mae and Freddie Mac and bank balance-sheet capacity, “a persistently low interest rate environment has rendered...
The proposal by the Office of the Comptroller of the Currency to create a special-purpose national bank charter for financial technology companies, including marketplace lenders, stirred up significantly different views during a panel discussion sponsored this week by the Brookings Institute. “The fact that this charter will be designed as one not to support innovation, but to support the biggest and most well-funded players, ends up being bad for consumers because it tilts the market against the true innovators,” said Margaret Liu, senior vice president and deputy general counsel for the Conference of State Bank Supervisors. But, Richard Neiman, head of regulatory and government affairs for Lending Club and former New York state banking commissioner, said...
The two GSEs were placed in conservatorship in September 2008 by Treasury and the Federal Housing Finance Agency. At the time, their common and junior preferred shares were considered worthless.
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