"With the number of key distinctions between CMBS and otherasset-backed securities, we support OCC Comptroller Dugan inrecognizing the prudence required when fashioning broadsecuritization-related regulatory reforms," says Patrick C. Sargent,president of CMSA.
Speaking at the American Securitization Forum last week, and laterinterviewed by the New York Times, Dugan has made a number ofsuggestions with an eye to jump starting securitization. Among themost controversial are new government rules dictating what would beconsidered safe or prudent loans--rules that perhaps would be in lieuof the so-called skin in the game requirement for lenders to maintaina portion of the risk on their books.
He also noted that too many rules or regulations could sink any signsof a re-emerging market. "I fully recognize the potential forcounterproductive action and for swinging the pendulum too far in theaccounting and regulatory response, Comptroller John Dugan said in hisspeech. "If we do not appropriately calibrate and coordinate ouractions, rather than reviving a healthy securitization market, we riskperpetuating its decline--with significant and long-lasting effectson credit availability."
Dugan's also discussed the idea of having an examination of each assettype as a means for incentivizing better underwriting--again, in lieuof risk retention. CMSA agrees with this notion.
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