On July 15, 2010, the Senate passed the
Dodd-Frank Wall Street Reform and Consumer Protection
Act, which was passed by the House of Representatives on
June 30th. The President has indicated that he will sign the
bill that has now passed both of the Houses.
The legislation covers a wide variety of
topics in an effort to address the causes of the recent
turmoil in the financial markets. With respect to
securitization, the legislation covers the following topics:
(i) whether issuers or other parties should be required to
retain a portion of the credit risk in securitizations; (ii)
disclosure and reporting standards related to securitization
transactions; (iii) representations and warranties required to
be provided in securitization transactions and the mechanisms
for enforcing such representations and warranties; and (iv)
requirements regarding due diligence with respect to loans
underlying securitization transactions.
As indicated in our complete summary,
many of the requirements to be imposed have been left by
Congress to actions to be taken by the Federal banking
agencies, the SEC and other regulatory authorities.