Banks and Issuers Alter Documents to Consider a World without Risk Retention

According to a recent Bloomberg article, banks and issuers have begun to alter bond documents to reflect their desire and hope that risk retention rules be repealed, as the new administration signals its willingness to consider regulatory changes.

Most recently, a commercial mortgage bond offering sponsored by two major banks included language that if the risk retention rules were repealed, banks would no longer agree to it as part of their offering contracts.

Moreover, since the zeal of regulatory repeal has swept over Washington, other deals have also included similar language and a securitization lawyer explained that "this type of clause is something people have been adding to address potential Dodd-Frank rollback," adding that "you build it in out of an excess of caution."

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