Assessing the Big Picture: What Will Be the Overall Impact of Emerging Legislation on ABS?

Abstract

This September 2014 ABS East conference panel discussion summary covered the following topics: the impact of Regulation AB II on issuers and investors, how the securitization industry is affected by the liquidity coverage ratio, investors’ view on residential mortgage-backed securities (RMBS) and government-sponsored enterprise (GSE) reform, whether the credit rating agency rules recently published by the SEC will restore market faith in the credit rating agencies, due diligence requirements in the new rating agency rules, the current state of credit rating shopping, the purpose and effectiveness of “too big to fail” rules, and opportunities for non-bank investors created by new banking regulations. Issues discussed with respect to Regulation AB II include the risk of privacy-law violations in loan-level disclosure requirements and different issuers’ and investors’ points of view concerning asset-level data requirements. With regard to the new bank liquidity rules, issues discussed included the final, improved outflow treatment for unfunded commitments to special-purpose entities (SPEs) and the lack of liquidity coverage for asset-backed securities (ABS) and RMBS in the liquidity coverage ratio. The panel discussed issuers’ due diligence reporting requirements, among other issues, with respect to the new credit rating agency rules.