Regulatory Tracker - Total Securitization And Credit Investment

Reg Tracker Regulator/Legislator Date Topic The Financial Accounting Standards Board June 2009 QSPES, consolidation The Financial Accounting Standards Board March 2009 OTTI, fair value The House Financial Services Committee March 2009 Rating agencies Treasury Consumer and corporate ABS, February 2009 CMBS, RMBS House of Representatives Residential January 2009 mortgages Department of Education Federal Reserve, Treasury November 2008 November 2008 Student loans Student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration Federal Reserve Securities and Exchange Commission, Financial Accounting Standards Board Asset-backed commercial October 2008 paper September, 2008 Fair value Accounting Treasury, Federal Housing Finance Agency, Federal Reserve September 2008 Fannie Mae, Freddie Mac FDIC July 2008 Covered Bonds House, Senate, Treasury July 2008 Housing, Fannie Mae, Freddie Mac Fannie Mae, Freddie Mac Rating Agencies Federal Reserve SEC July 2008 July 2008 Treasury Senate International Organization of Securities Commissions Hawaii Governor's Office, Hawaii's Department of Commerce and Consumer Affairs June-July 2008 June 2008 June 2008 Covered Bonds Credit Cards Rating Agencies June 2008 Insurance Securitizations Department of Education June 2008 Student Loans Federal Reserve May 2008 Credit Cards Financial Accounting Standards Board April-July 2008 Qualified Special Purpose Entity Status House of Represenatives FebruaryAugust 2008 Credit Cards Particulars Status FASB published FAS 166 and 167. FAS 166 revises FAS 140, and eliminates qualifying special-purpose entities, changes the requirements for derecognizing financial assets and requires additional disclosures. Statement 167 revises FASB Interpretation No. 46(R), and changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The new statements were published June 12. FASB introduced staff positions that offered new guidance on FAS 157 for measuring fair value and FAS 115, FAS 124 and EITF 9920 on other than temporary impairment. The new guidance introduces a two-step process for determining fair value. The The proposed changes were proposals also clarify how OTTI should be reported. announced March 17. Rep. Patrick McHenry (R-N.C.), a member of the House Financial Services Committee, has introduced the Credit Rating Agency Transparency and Disclosure Act. The bill would ensure issuers and originators provide credit rating agencies with adequate information on the assets underlying a structured security; require credit rating agencies to institute procedures for getting data from issuers and originators on how they check the veracity of the data and fraud detection capabilities; and require the agencies to disclose in a central database the historical default rates of all classes of financial products they have rated. The bill was introduced March 11. The plan was announced Feb. 10. TALF was made operational on March 3. The revised TALF accepts a broader The newly announced Financial Stability Plan includes six new range of assets as collateral and provisions. Among them, the $200 billion TALF, will be expanded to dropped a requirement that users of the $1 trillion, with CMBS now eligible for the program. In partnership program comply with executive with the FDIC and the Federal Reserve, the Treasury will establish compensation limits. New updates a $500 billion public-private investment fund, using public financing released March 11 sought to give to leverage private capital for large-scale asset purchases. The fund comfort to investors regarding their could be expanded to as much $1 trillion. In addition, the Financial participation in the program. The Fed Stability Trust, including a comprehensive stress test, will provide expanded the types of assets additional capital assistance to the banks. acceptable as collateral on March 19. Legislation was introduced in Congress that would allow bankruptcy judges to modify mortgages. Judges would be able to reduce mortgage rates, forgive principal over what the property’s fair The legislation was passed by the market value is and/or extend mortgage terms. House Judiciary Committee on Jan. 27. The Department of Education formed the first asset-backed commercial The Department of Education said it would create an ABCP conduit paper conduit to purchase funding to purchase and fund FFELP loans. notes backed by FFELP student loans. Loan Facility will lend up to $200 billion on a non-recourse basis to The plan was announced Nov. 25, 2008 holders of newly and recently originated AAA securitizations backed by student loans, auto loans, credit card loans and loans guaranteed by the Small Business Administration. The Treasury will provide $20 billion of credit protection to the New York Fed for TALF using funds from the Troubled Asset Relief Program. The Federal Reserve set up Commercial Paper Funding Facility fto buy commercial paper, which the usual buyers have been avoiding. The CPFF will purchase three-month unsecured and asset-backed commercial paper directly from eligible issuers. The SEC and FASB issued a joint statement on Sept. 30 issued new guidance that allows companies more flexibility in using internal assumptions for fairv value accounting. The U.S. Treasury announced plans to place Fannie Mae and Freddie Mac into conservatorship, giving management control to their regulator, the Federal Housing Finance Agency. The companies' chief executives will be replaced and the government will inject up to $200 billion in capital as needed. Additionally, the Treasury has established a liquidity facility enabling the GSEs to borrow money via collateralized loans. The FDIC issued a final covered bond policy statement that clarified what term limits U.S. covered bonds would be allowed to have and what collateral they could be backed by. The policy statement also clarified the treatment of covered bonds in a conservatorship or receivership. The facility's creation was announced Oct. 7, 2008 Announcement made Sept. 30, 2008 Announcement made Sept. 7, 2008 The policy statement is in effect and the FDIC said it may update it as the U.S. covered bond market matures. President Bush signed a massive housing bill into law that allows the Treasury to provide credit to Fannie Mae and Freddie Mac and to make an equity investment in the government sponsored entities. The proposed law also grants a new regulator fresh authority over the GSEs’ capital requirements and portfolio holdings. It also allows the regulator to share information regarding the capital, asset liabilities, financial condition and risk management practices of the agencies with the Federal Reserve regularly. The $300 billion Federal Housing Administration rescue package is also a part of the bill. The rescue package gives the FHA the authority to refinance existing mortgages if the lender writes down the loan to 90% of the property’s value and pays a 3% upfront insurance premium. The bill also extends a $7,500 repayable tax credit for first-time homebuyers to July 1 of next year. Goes into effect Oct. 1, 2008. The Federal Reserve has allowed the Federal Reserve Bank of New York to lend to Fannie Mae and Freddie Mac should such lending prove necessary. The authorization stands. Revisions to the way that rating agencies rate structured products. The SEC has proposed the changes. The Treasury remains supportive of the market. Bank of America, Citigroup, The Treasury issued best practices is offering support towards a JPMorgan and Wells Fargo said in late covered bond structure in the U.S. Bankers, regulators and issuers July that they would issue covered recently met to discuss the direction of the emerging sector. bonds. Legislation to allow small and large businesses to negotiate with credit card companies to reduce interchange fees. Proposed in the senate. IOSCO provided guidelines on how rating agencies should behave when rating a deal. Guidelines have been proposed. Hawaiian officials condolidated securitization regulations that were in different areas of the state's legal code and gave the insurance commissioner the ability to approve securitizations that do not strictly conform to the state's legal requirements Signed into law by the governor. The DoE received temporary authority from President Bush, the House and the Senate to purchase loans. The DoE recently issued guidelines as to how it would be purchasing loans. In effect Requirement that credit card companies provide consumers with advance notice of credit card account rate increases. The regulation would also prohibit other unfair practices. Proposed by the Fed. FASB originally looked to force banks to bring some off balance sheet assets back on starting in 2009 but pushed the date back by a year following concern from market participants. FASB has recommended doing away with QSPE status, which would place originator's assets back onto their balance sheets. Legislation introduced by Rep. Carolyn Maloney that is similar to the Federal Reserve's requirement that credit card companies provide The legislation has yet to make its way consumers with notice of credit card account rate increases. to the president. Background FASB Web site FASB Web site Congressional Web site Treasury statement House Judiciary Committee release Department of Education rekease Federal Reserve System press release Federal Reserve System press release FASB press release U.S. Treasury article FDIC press release Total Securitization article Federal Reserve System press release SEC Proposal Total Securitization article Senator Durbin press release Total Securitization article Total Securitization article Federal Register, Volume 73, No. 127 Federal Reserve System press release Total Securitization article H.R. 5244