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The Week in Review highlights this week's important
legal and regulatory developments affecting the financial
industry.
Featured in this week's edition:
FDIC Securitization Safe Harbor
On November 12, the FDIC approved an
interim final rule extending the safe
harbor of Section 360.6(b) until March 31, 2010 for
securitizations and participations that will lose the
sale accounting treatment required by that rule because of
recent changes to GAAP (FAS 166/167).
All securitizations and participations issued on or before
March 31, 2010 (including securitizations by revolving trusts
issued on or before March 31, 2010) will fall under the safe
harbor so long as the securitizations or participations would
satisfy the conditions for sale accounting treatment under
GAAP as in effect prior to November 15, 2009, and would
otherwise comply with existing Section 360.6. The FDIC
intends to publish in December a Notice of Proposed Rulemaking
to further amend Section 360.6 regarding the treatment of
securitizations and participations issued after March 31, 2010
and in the interim will consult with appropriate regulators to
solicit feedback on the proposal. Comments are requested
within 45 days of publication of the rule in the Federal
Register. FDIC
Rule. FDIC
Memorandum.
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NAIC Approves RMBS Rating Model
On November 6, the National Association of
Insurance Commissioners (NAIC) announced that its
members approved a proposal to develop a new model for
determining the regulatory treatment of RMBS, which
will produce ratings designations for approximately
18,000 insurer-owned RMBS. These ratings designations
will apply to year-end 2009 reporting and will replace
ratings designations from NRSROs which, until now, have been
used by regulators to score RMBS for solvency
regulation. NAIC
Release. NAIC
Proposal.
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Capital Assistance Program Closes
On November 9, Treasury announced that the
Capital Assistance Program, created to
provide additional taxpayer support to financial institutions
subject to stress tests under the
Supervisory Capital Assessment Program,
closed with no investments having been made. Treasury
Release. Fed
Release.
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ISDA Common Principles for Give-Up
Agreements
On November 10, ISDA published recommended
common principles intended to guide
documentation for give-up agreements across
central counterparties (CCPs) or clearing houses.
The principles address: (i) fallbacks in the event of
rejection for clearing, (ii) the ability to reject trades,
(iii) a reduction of trading limits, and (iv) determinations
of market decisional bodies in relation to CCPs. ISDA
Release.
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Significant Legislative
Developments
On November 10, Senator Dodd introduced a
discussion draft of financial regulatory
reform legislation. Discussion
Draft. Senate
Summary of Discussion Draft.
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Rating Agency Criteria and Methodology
Updates
On November 6, S&P released its updated criteria
for U.S. RMBS servicer advance
transactions with 30-year or longer legal final
maturities. S&P
Release.
On November 11, Fitch released its amended global criteria
report for cash flow analysis in CDOs which has
been expanded to include all CDOs. The core criteria
have not changed. Fitch
Release. Fitch
Report.
Note: Free registration is required for all rating
agency releases and reports.
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