The Securities Industry and Financial Markets Association (SIFMA) today issued the following statement from Richard Dorfman, managing director and head of the SIFMA Securitization Group (SSG), in response to the Federal Deposit Insurance Corporation’s (FDIC) notice of proposed rulemaking regarding treatment of a bank's securitizations in the event of a conservatorship or receivership:
“SIFMA strongly supports reasonable efforts to restore and reshape the securitization market. Securitization is essential to the provision of credit to American consumers and small businesses and therefore plays a critically important role in economic recovery. While we are pleased that the proposal issued today reflects changes to the initial proposal offered by the FDIC earlier this year, we have significant concerns that the proposed regulations could potentially hamper a recovery in the securitization markets.
“Issuers, investors and credit rating agencies require certainty at the time of issuance, secondary trading and in financing transactions as to the treatment of bank securitizations in the event of insolvency. Some of the FDIC’s proposed rules may not provide that certainty and therefore could be detrimental to the re-establishment of well-functioning securitization markets. We are also concerned that the proposed safe harbor is not an appropriate means of regulation, in that substantive regulation of securitization market activities would be effected through the FDIC's insolvency regime, which could potentially create an unlevel playing field for bank issuers.
“In addition, SIFMA strongly believes that securitization reform should be coordinated and considered in the totality of the financial regulatory reform work currently being undertaken by Congress and the significant rule proposals recently published by the SEC.
“SIFMA looks forward to working with the FDIC and commenting on this proposal in greater detail during the formal comment period.”