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.