SIFMA provides comments to the Securities and Exchange Commission (SEC) on the SEC’s proposed regulations on asset backed securities, S7-24-10 and S7-26-10.

SIFMA signed this letter with the Bond Dealers of America, Council of Infrastructure Financing Authorities, Education Finance Council, Government Finance Officers Association, National Association of Counties, National Association of Health and Education Facilities Authorities, National Association of Independent Public Financial Advisors, National Association of Local Housing Finance Agencies, National Association of State Auditors, Comptrollers and Treasurers, National Association of State Treasurers, National Council of State Housing Agencies, National League of Cities, and the U.S. Conference of Mayors.

A summary of the views expressed in this letter are as follows:

• Municipal securities should be excluded from the definition of ABS and the proposed regulatory scheme.
• There is no evidence that Congress intended the SEC to adopt regulations pursuant to the Dodd-Frank Wall Street Reform And Consumer Protection Act (Dodd-Frank Act) that would encompass municipal securities.
• Section 941(b) of the Dodd-Frank Act directs the SEC to provide municipal securities a “total or partial exemption” from the ABS risk retention and disclosure provisions, as a direction that existing categories of municipal securities would not be affected by those requirements.
• The proposal would partially repeal the Tower Amendment.
• The proposed action is inconsistent with and in direct conflict with the Subtitle H requirement of the Dodd-Frank Act mandating a GAO study be completed on municipal securities disclosure, which was clearly intended to provide a factual basis for consideration of these matters.
• Municipal securities are very different financial products from ABS.
• None of the requirements of the proposed Rules may be meaningfully applied to the securities of municipal issuers.
• Unlike the special purpose entities that issue ABS, municipal housing, student loan and conduit issuers often supplement underlying asset cash flows with other sources of payment and typically retain substantial programmatic responsibilities.
• Market participants do not identify or consider municipal securities as substantially similar to ABS.
• There is no evidence that Congress intended to expand Section 7 of the 1933 Act and Section 15(d) of the 1934 Act.