The Asset Management Group of SIFMA (SIFMA AMG) provides comments to the Office of the Comptroller of the Currency (OCC), the Securities and Exchange Commission (SEC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Federal Housing Finance Agency (FHFA), and the U.S. Department of Housing and Urban Development (HUD) (collectively, the Agencies) on the Agencies’ proposed rule for credit risk retention.

The 2013 Proposal revises the proposed rules previously published by the Agencies on April 29, 2011 (the 2011 Proposal).  Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank Act) requires the Agencies to prescribe regulations to require a securitizer to retain an economic interest in a portion of the credit risk for any asset that the securitizer, through the issuance of an asset-backed security, transfers, sells, or conveys to a third party. The regulations must require the retention of at least 5% of the credit risk for assets other than those subject to an exemption or exception.

SIFMA AMG believes that the governing principle underlying both the 2011 and 2013 Proposals—the alignment of economic interests between asset securitizers and investors through risk retention—is a critical step to the robust return of the private securitization market; and shares its views on the proposal.