Securitization

Two years ago, on July 21, 2010, President Obama signed into law a package of financial regulatory reforms unparalleled in scope and depth since the New Deal. The Dodd-Frank Act was intended to restructure the regulatory framework for the US financial system, with broad and deep implications for the financial services industry where the crisis started. But its impact also was intended to be felt well beyond the financial sector, extending federal regulation into areas of corporate governance applicable to all US public companies.

Few provisions of the Dodd-Frank Act took effect in the summer of 2010. Instead, the specifics of the Act were intended to be developed through the federal rulemaking process, as the Act mandated the development and implementation of nearly 400 separate regulations to be enacted by, or coordinated among, nearly a dozen federal departments or agencies. To date, the deadlines for more than half of the required rulemakings have expired. But even with these delays, the last two years have witnessed the promulgation of more than 100 rules and the issuance of many additional proposed regulations for public comment. This Report discusses the many strides that have been made pursuant to the Act to date and forecasts what is yet to come.

Click here for a PDF of the full report.

On June 7, 2012 the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Fed), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the Agencies) released revisions to their market risk capital rules in a final rule titled Risk-Based Capital Guidelines: Market Risk.  The rule, which implements certain revisions made by the Basel Committee on Banking Supervision (BCBS) to its market risk framework between 2005 and 2010, requires large banking organizations to adjust their capital requirements to better capture the market risk in their trading activities.  Consistent with certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the final rule does not include aspects of the BCBS’s market risk framework that rely on credit ratings and instead includes alternative standards for calculating standardized specific capital requirements for debt and securitization positions.  The rule applies to banks with aggregate trading assets and trading liabilities equal to at least 10 percent of total assets or at least $1 billion dollars. [click to continue…]

By Heath Tarbert, Sylvia Mayer and Derrick Cephas

Click here for a PDF of this Weil Alert

Click here for a PDF of the related article A SIFI in Three Easy Steps?  FSOC Approves Final Rule for Nonbank SIFI Designations appearing in The Banking Law Journal, May 2012

On April 3, 2012, the Financial Stability Oversight Council (“FSOC”) voted to approve its long-awaited Final Rule implementing Section 113 of the Dodd-Frank Act, the controversial provision that directs the federal government to identify systemically important financial institutions (“SIFIs”) outside the traditional banking sector that could pose a threat to the U.S. financial system.[1] Once designated by a two-thirds majority of the FSOC (including an affirmative vote of the Treasury Secretary), each “nonbank financial company,” often referred to in short-hand as a “nonbank SIFI,” would be placed under Federal Reserve Board (“Fed”) supervision, as well as become subject to a host of enhanced prudential measures—including capital, liquidity, leverage, stress testing, resolution planning, and risk management requirements. The FSOC’s recent approval of the Final Rule—as well as its accompanying interpretive Guidance[2]—marks the start of an important first step in the application of enhanced SIFI regulation beyond large bank holding companies with assets of $50 billion or greater.[3]

The FSOC issued its Final Rule following consideration of over forty public comments to its Notice of Proposed Rulemaking (the “Proposed Rule”), released in October, 2011.[4]

Overview

The Final Rule establishes a three-step process comprising three individual “stages” by which the FSOC will apply two “Determination Standards” (one based on actual or potential material financial distress and the other based on the nature, scope, size, scale, concentration, interconnectedness or mix of activities) to analyze whether a company may pose a threat to the financial stability of the U.S., along with a six-category analytic framework to determine whether a company should be deemed a nonbank SIFI. In an effort to increase the transparency of the process, the FSOC issued accompanying Guidance providing additional [click to continue…]

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank or the Act) was enacted one year ago. At that time, it was heralded as perhaps the most dramatic set of regulatory reforms since the 1930s. The Act was expected to have significant effects in both the short and long term. Dodd-Frank’s provisions, however, are not confined to the US market. The Act is intended to have significant implications for non-US companies doing business in the United States or whose securities are listed on a US stock exchange. What is more, the Act purports to regulate certain transactions and entities with little direct connection to the United States.

by: Alex RadetskyCarlos Larkin

On March 29, 2011, the Office of the Comptroller of the Currency (“OCC’), the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), the U.S. Securities and Exchange Commission (“SEC”), the Federal Housing Finance Agency (“FHFA”), and the Department of Housing and Urban Development (“HUD”) jointly issued a proposed rule to implement Section 941(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Proposed Rule”).  Althought this rule is extenstive, this post will be limited to a discussion of Qualified Residential Mortgages (“QRMs”), their exempt status and the underwriting standards that create this exemption.

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