On Sept. 27, the Board of Directors of the Federal DepositInsurance Corp. voted to adopt revised safe-harbor rules regardingits treatment as a receiver or conservator of an insured depositoryinstitution with respect to financial assets that were securitizedby the seized IDI. Since 2000, the FDIC has provided safe-harborrules that confirmed, in the event of a bank failure, the FDICwould not attempt to reclaim assets transferred into asecuritization if an accounting sale had occurred by reason of thesecuritization.

When the Financial Accounting Standards Board revised thegenerally accepted accounting principles applicable tosecuritizations in 2009, the FDIC, in response to industry inquiry,released an Advance Notice of Proposed Rulemaking, setting forthproposals for a new safe harbor dealing with securitizationtransactions. The ANPR went far beyond using accounting treatmentas a basis for dealing with IDI-securitized assets, however, andproposed new rules to govern the FDIC's treatment of suchassets.

The most controversial principle set forth in the ANPR was themandate that the IDI contributing assets to the securitization mustretain a 5% interest in the securitization vehicle. Various tradeorganizations, including the American Securitization Forum and theCommercial Real Estate Finance Council, argued in comment lettersthat the retention requirement was outside the scope of providingcertainty to investors purchasing bonds issued by the IDI sponsoredsecuritization vehicle. And, in any event, the measure waspremature because the then-pending DoddFrank financial regulationbill provided that risk-retention rules should be consideredjointly by a number of regulatory bodies and by asset class (i.e.not necessarily one size fits all). While the FDIC did modify someof the proposals made by the ANPR in May of this year, it continuedto push forward with its retention concept and other proposedrequirements for an IDI securitization to fall within the safeharbor.