SEC Commissioner Piwowar: Evaluate the Cumulative Impact of Regulation

U.S. Securities and Exchange Commission (“SEC”) Commissioner Michael S. Piwowar delivered keynote remarks at SFIG’s ABS Vegas 2016 conference last week, focusing on the benefits of the securitization market, the SEC’s recent actions with respect to securitizations and credit rating agencies, and observations of recent developments in European securitizations.

When assessing where the SEC should go from here, Piwowar recommended that the agency evaluate the cumulative impact of all the new rules (i.e. Dodd-Frank and Basel capital and liquidity regulations) on the securitization markets. The Commissioner highlighted the declining trend of securitization public offerings between 2014 and 2015 with a $22 billion decrease and this trend has continued through 2016. Piwowar stated:

We must appropriately regulate securitization offerings, including rules that adequately align the incentives of investors and sponsors. However, we must keep in mind that unnecessary or inappropriate regulation of securitizations may lead to less availability of capital, increased borrowing rates, and a more limited supply of credit. These effects are likely to be passed on to borrowers, either in terms of increased borrowing costs or loss of access to credit, and thus will cut directly against the benefits of securitization. 

To view Commissioner Piwowar’s keynote address, please click here. To view SFIG’s Executive Director Richard John’s testimony calling for a review of the combined effect of regulation on asset-backed securities liquidity, please click here.

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