FDIC Removes Disclosure Requirement in Securitization Safe Harbor Rule
FDIC is amending the Securitization Safe Harbor Rule, which relates to the treatment of financial assets transferred in connection with a securitization transaction. FDIC is revising the rule by removing a disclosure requirement that was established by the Securitization Safe Harbor Rule when it was amended and restated in 2010. As amended, disclosure is required under § 360.6(b)(2)(i)(A) only in the case of an issuance of obligations that is subject to Regulation AB. The final rule will be effective from May 04, 2020.
The amendment is intended to eliminate a requirement that the securitization documents require compliance with Regulation AB of the SEC in circumstances where Regulation AB by its terms would not apply to the issuance of obligations backed by such financial assets. The policy objective of this final rule is to remove an unnecessary barrier to securitization transactions, particularly the securitization of residential mortgages, without adverse effects on the safety and soundness of insured depository institutions. The Securitization Safe Harbor Rule addresses circumstances that may arise if FDIC is appointed receiver or conservator for an insured depository institution that has sponsored one or more securitization transactions. FDIC is removing the requirement of the Securitization Safe Harbor Rule that the documents governing a securitization transaction require compliance with Regulation AB of the SEC in circumstances where Regulation AB is not applicable to the transaction under the terms of the regulation.
Regulation AB imposes significant asset-level disclosure requirements in connection with registered securitization issuances. While SEC has not applied the Regulation AB disclosure requirements to private placement transactions, the Securitization Safe Harbor Rule has required (except for certain grandfathered transactions) that these disclosures be required as a condition for eligibility for benefits of the Securitization Safe Harbor Rule. The net effect appears to have been a disincentive for insured depository institutions to sponsor securitizations of residential mortgages that are compliant with the rule.
FDIC had proposed these amendments on August 22, 2019, with the comment period of the proposed rule ending on October 21, 2019. FDIC received ten comment letters—five from trade organizations, one from an insured depository institution, two from individuals, one from a financial reform advocacy group, and one from a financial market public interest group. FDIC considered all of the comments it received when developing the final rule. The final rule, however, remains unchanged from the proposed rule.
Related Link: Final Rule
Effective Date: May 04, 2020
Keywords: Americas, US, Banking, Securities, Securitization, Disclosures, Securitization Safe Harbor Rule, Regulation AB, SEC, FDIC
Related Articles
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
IOSCO Welcomes Work on Sustainability-Related Corporate Reporting
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
BoE Allows One-Day Delay in Statistical Data Submissions by Banks
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
ACPR Amends Reporting Module Timelines Under EBA Framework 3.2
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
APRA to Modernize Prudential Architecture, Reduces Liquidity Facility
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.
PBC Issues List of Systemic Banks, Adds 2 Foreign Banks to CERB List
The China Banking and Insurance Regulatory Commission (CBIRC) published the administrative measures for internal control of wealth management companies, which come into force on the day of promulgation.
PRA Publishes Discussion Paper on Its Future Approach to Policy
The Prudential Regulation Authority (PRA) proposed its approach to policy-making as it takes on wider rulemaking responsibilities under the Financial Services and Markets Bill.
ECB Publishes Opinion on Proposed Regulation on Data Act
The European Central Bank (ECB) published its opinion on the proposal for a regulation on harmonized rules on fair access to and use of data (Data Act).
