Few Surprises in the Senate Securitization Reform, Highlighting the FDIC Role $GS $BAC $CS $BCS

• Regulatory Reform Moves Forward – The Senate Banking Committee released on Monday its wide ranging proposal for financial regulatory reform, including several provisions specific to the securitization market.

• Senate and House Securitization Reforms Fairly Consistent – Overall, the Senate bill provisions are encouragingly fairly consistent with the securitizationspecific provisions that the House bill included. There are a few differences however, that call for attention.

• No “CMBS Retention Exemption”, but Yes to Sector Differentiation – The Senate bills lacks explicit language providing exemption from the basic retention requirement, when the first loss position in a securitization is bought by a third-party purchaser (as is customary in the CMBS sector). The bill does, however, direct regulators to establish separate retention rules across asset classes.

•  FDIC Safe Harbor Conditions – As regulators, including the FDIC, are tasked with implementing the specific rules, their actions will be key to follow. It is especially important to look for any differences between the FDIC expected final safe harbor conditions, and the Senate and House bills provisions.

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