September 17, 2014 Newsletter
September 17, 2014


SFIG Calendar

Advocacy Outlook

Industry News Highlights

Upcoming Events in Washington


On Monday, SFIG submitted comments to the Federal Housing Finance Agency (“FHFA”) in response to its Strategic Plan for 2015-2019, which addresses the agency’s priorities as regulator of the Federal Home Loan Bank System and as regulator and conservator of the Government Sponsored Enterprises (“GSEs”) Fannie Mae and Freddie Mac. The Strategic Plan highlights three goals for FHFA, including:

  1. Ensuring safe and sound regulated entities;
  2. Ensuring liquidity, stability and access in housing finance; and
  3. Managing the Enterprises’ ongoing conservatorships.

SFIG’s comments were developed through its GSE Reform Task Force and drafted by counsel at Katten, Muchin and Rosenman LLP.

The Task Force is also responding to FHFA’s proposal for a single security that would be issued by the GSEs and eligible for trading in the to-be-announced market (“TBA”). FHFA is requesting input on all aspects of the security’s structure and how the transition away from the current system might work, with specific questions relating to TBA eligibility, legacy securities, the potential industry impact of the initiative, and the risk of market disruption from issuance. Comments are due on October 13, 2014 and members interested in contributing to SFIG’s response should please contact


SFIG is very excited to announce the formation of Women in Securitization—an initiative committed to promoting the development and recognizing the achievements of women in our industry. This initiative will provide a means of connecting women in structured finance to peers, mentors/sponsors, and ideas that will positively influence industry perceptions and practices. We aim to engage our membership and facilitate an environment in the securitization community that will encourage women’s ambition and advancement. 

We encourage the women, and men, of structured finance to participate in this venture through one or more of the following avenues:

  1. Industry Engagement:  This group will work on engaging members of the industry, from junior employees to senior level executives, to ensure that we are able to fully engage women across the field. 
  2. Mentoring and Peer Sponsorship:  Mentors and Peer Sponsors will engage with women in the industry to help share their knowledge, insight and guidance.  They will also help facilitate the connection between those looking for a mentor or sponsor, and those looking to serve as a mentor or sponsor.
  3. Education Initiatives:  This group will help guide development of educational resources for SFIG members and others in the structured finance community that highlight the importance of creating and advancing an environment that empowers women.  In addition to helping develop and distribute such initiatives, this group will also help highlight the work of women in our industry.
  4. Events and Social Opportunities:  Working in conjunction with the other work groups, this stream will help plan and promote activities and events to provide a positive forum for women, and men, to network and exchange ideas and information.

Please stop by the SFIG booth during ABS East to learn more or email if you are interested in becoming part of this important and exciting opportunity.


According to a recent Bloomberg article, the International Organization of Securities Commissions (“IOSCO”) will present criteria for marketable asset-backed securities (“ABS”) to finance ministers from the G20 nations this week. IOSCO seeks to assist in the process of creating standards that would encourage non-bank investors to buy.

On September 4th, European Central Bank (“ECB”) President Mario Draghi stated that the ECB will buy the senior tranches of simple and transparent packaged securities. “We want to make sure that these ABS are being used to extend credit to the real economy.”

IOSCO Chairman Greg Medcraft said that previous IOSCO research shows that the principles of simplicity, transparency, and consistency are crucial to making ABS attractive to non-bank investors such as pension funds and asset managers. “They are the three key principles,” he said. “We’ve looked at that in terms of 16 criteria, looking at asset risk, structural risk, service and fiduciary risk, which is the way an investor, and the rating agencies, look at risk.”

Medcraft also said that authorities must avoid discriminating against asset-backed debt. “Investors are saying they want neutrality,” he said. “We’re not saying ‘give us a special break here,’ but we do want that it’s consistent. So for instance when it comes to capital charges for covered bonds vis-a-vis those for securitized products, they should be neutral.” He added that ABS in the right hands is a “fabulous technology.”

These latest statements made by European regulators and international standard setters highlight the disparate treatment of ABS in Europe versus the U.S. In the final U.S. liquidity coverage ratio rules, for example, ABS and private label RMBS were afforded no liquidity status.

IOSCO will update G20 finance ministers this week and report to G20 leaders at their summit in Brisbane in November.

In June, Reginald Imamura and Richard Johns represented SFIG at a Basel Committee on Banking Supervision (“BCBS”)-IOSCO Task Force on Securitization Markets roundtable discussion at the International Accounting Standards Board in London for key regulators and industry representatives. The roundtable agenda included the current state of ABS markets across the globe, investor base for ABS (current and future), key impediments to the ABS market functioning and qualifying versus non-qualifying securitizations.

A key work stream of SFIG’s Shadow Banking Task Force is engagement with IOSCO and BCBS on the reform and revitalization of securitization. If you are interested in joining this Task Force, please contact Amanda Bateman at


This morning, Moody’s Investor Service announced changes to its global methodology for rating credit card and revolving consumer loan asset-backed securities (“ABS”). Their new approach will incorporate the credit quality of the sponsor more explicitly into Moody’s rating analysis and reflects other modifications to assumptions about credit card portfolio performance under stress.

Moody's also makes an explicit adjustment, based on the rating of the sponsor, on the level of credit enhancement consistent with a given bond rating. "In our new approach, our rating analysis starts with a cash flow model in which we assume the closure of all credit card accounts in the portfolio," says Moody's Managing Director William Black. "We will then reduce the resulting credit enhancement based on the sponsor's rating. Overall, the approach allows for more differentiation among trusts based on the quality of the collateral pool, the economics of the trust, and the structure of the program, particularly in the event of account closures."

Moody's published a Request for Comment ("RFC") entitled "Moody's Approach to Rating Credit Card Receivables-Backed Securities" on April 28th and received a total of four written comments in response to this RFC. SFIG’s Credit Card Committee’s comment letter can be found here.

Industry comments generally fell into three broad categories:

  1. Suggestions that the methodology should focus on the performance and quality of the collateral backing credit card ABS, not on the credit quality of the sponsor.
  2. Concerns that the historical data used in the analysis and the examples presented in the RFC of the failed credit card portfolios were not representative of the current state of the credit card market.
  3. Requests for further clarity on how Moody's might adjust the indicative dependency curve in the future and our approach to determining the subordinate note ratings.

Moody's has made clarifying and refining adjustments to the proposed methodology following the consultation period to address the comments that the rating agency received. 


Due to the industry conference next week, SFIG will not be issuing a newsletter on September 24th. We look forward to seeing everyone at the 2014 IMN ABS East Conference in Miami next week. We would also like to remind everyone that many of our members and staff will be speaking on panels, including: Richard Johns who will be speaking on the “General Session: Overview of the State of Mortgage Funding in the U.S.” panel and Sairah Burki who will be participating on the “General Session: Assessing the Big Picture: What will be the Overall Impact of Emerging Legislation on ABS?” panel.


THURSDAY, September 18, 2014
10:00 a.m. – 11:00 a.m. (EST)


THURSDAY, September 18, 2014
3:00 p.m. – 4:00 p.m. (EST)


THURSDAY, September 18, 2014
4:00 p.m. – 5:00 p.m. (EST)


SUNDAY, September 21, 2014 – TUESDAY, September 23, 2014
The Fontainebleau Hotel
Miami Beach, FL
Registration available here

Richard Johns will be speaking on the “General Session: Overview of the State of Mortgage Funding in the U.S.” panel and Sairah Burki will be participating on the “General Session: Assessing the Big Picture: What will be the Overall Impact of Emerging Legislation on ABS?” panel.


FRIDAY, September 26, 2014
11:00 a.m. – 12:00 p.m. (EST)


TUESDAY, October 21, 2014
6:00 p.m. – 9:00 p.m. (EST)
Ernst & Young
5 Times Square
New York, NY  10036
Registration and agenda will be forthcoming 

*Please note, this event is closed to the press.


WEDNESDAY, November 12, 2014
New York Marriott Downtown
New York City, NY
Registration available here


FRIDAY, November 14, 2014
9:30 a.m. – 4:00 p.m. (PDT)
Hyatt Regency Century Plaza
2025 Avenue of the Stars
Los Angeles, CA 90067 

Richard Johns will be speaking on the “Solutions for a Recovering Market: Housing Affordability and Financing Homeownership” panel.


THURSDAY, December 4, 2014
PLI New York Center
1777 Avenue of the Americas
New York City, NY

Richard Johns will be speaking on the “Examining Key Regulations Through a Global Lens” panel.


SUNDAY, February 8, 2015 – WEDNESDAY, February 11, 2015
The Aria Resort and Casino
Las Vegas, NV
Registration available here

If you would like to participate in the work SFIG is undertaking through our committees as highlighted below, please e-mail For specific inquiries on any of SFIG’s advocacy efforts, please contact the staff member listed for the related project.

The RMBS 3.0 Task Force continues to build upon the momentum of its recent release of its First Edition RMBS 3.0 Green Papers, and the submission of a response to Treasury’s request for input on Private Label Securities. The Task Force will continue to address issues specific to private label mortgage securities on work streams relating to (1) Representations, Warranties, and Repurchase Enforcement; (2) Due Diligence, Data, and Loan-Level Disclosure; and (3) Role of Transaction Parties and Bondholder Communications. We encourage members to participate in any or all of the working groups to contribute towards the mission of RMBS 3.0. For additional information on RMBS 3.0, or to join the Task Force, please contact

The GSE Reform Task Force submitted comments on Monday in response to the FHFA’s Strategic Plan for 2015-2019 and is currently developing a response to its proposed structure for a single agency security. The Task Force previously reviewed the Johnson-Crapo proposal, with SFIG staff summarizing its recommendations in a briefing book on the legislation. SFIG has also reviewed the House Republican proposal for GSE Reform, the PATH Act. If you would like to learn more about SFIG’s activities in these areas, please contact

The Mortgage Loan-Level Disclosure Task Force is studying the recent Regulation AB II release of Schedule AL and comparing it to SFIG’s Schedule L submission in February of this year. SFIG also continues to have weekly Mortgage Industry Standards Maintenance Organization calls to go through data elements that lenders should deliver in securitizations. Please contact for additional information on SFIG’s work on this topic.

The Volcker Task Force has been working with SFIG’s various asset class and legal counsel committees to identify areas within the Volcker Rule in need of clarification, with proposed questions and answers reviewed by the task force via a survey. Please contact to participate on the Volcker Task Force.

The Risk Retention Committee is continuing to follow up with regulators on risk retention questions across asset classes. Please contact with any questions.

SFIG’s Chinese Market Committee held its first full committee call on September 12th. Future calls will continue to focus on a high-level description of SFIG’s partnership with the Chinese Securitization Forum, potential upcoming educational discussions and a sharing of recent market developments in China. If you would like more information on SFIG’s work with respect to Chinese securitization, please contact

SFIG’s Shadow Banking Task Force has established the following agenda:

  • Leverage the predictive powers of the G20’s shadow banking initiative to determine future SFIG advocacy initiatives;
  • Assess the level of regulation to which our members are already subject;
  • Measure the full impact of those regulations on lending decisions and business models; and
  • Provide input into IOSCO, BCBS and IAIS on the revitalization of securitization markets.

The Task Force will have its first full meeting in the coming weeks, and members from across asset classes are encouraged to participate. To register your interest in SFIG’s Shadow Banking Initiative, please contact

The Regulation AB II Task Force will be holding monthly task force calls to identify and address key questions regarding the implementation of the final rule. On a bi-weekly basis, asset-class committees will be holding calls to discuss the implementation of Reg AB II as it pertains to their respective asset classes. Findings and questions arising out of these bi-weekly calls will be discussed during the monthly Regulation AB II Task Force calls. SFIG members who are interested in joining this task force or asset specific committees should contact

The Regulatory Capital and Liquidity Committee is forming a working group to address industry concerns related to the Federal Reserve Board’s Final Rule on the Liquidity Coverage Ratio (“LCR”). To become involved in SFIG’s advocacy on the Final LCR rule, please contact

The Derivatives in Securitization Task Force will be commenting on the prudential regulators’ proposal regarding margin and capital requirements for covered swap entities as well as the CFTC’s proposal on margin requirements for uncleared swaps. Please see the CFTC’s fact sheet and Q & A concerning this proposal (the proposal has not yet been published). SFIG submitted a comment letter at the end of June, advocating for asset-backed securities issuers to qualify for the “low-risk financial end user” designation proposed by prudential regulators in the original proposal. SFIG members who are interested in learning more about this initiative should email

SFIG’s Credit Rating Reform Task Force will hold a conference call on Friday, September 26, 2014 at 11:00 a.m. (EST) to discuss the Securities and Exchange Commission’s recent Final Rules for nationally recognized statistical rating organizations, which were approved August 27th. Members interested in joining this Task Force should contact

The Money Market Fund Reform Working Group will be submitting a comment letter on the Securities and Exchange Commission’s July 23rd proposal which includes, among other things, possibly amending rule 2a-7’s issuer diversification provisions to eliminate an exclusion that is currently available for securities subject to a guarantee issued by a non-controlled person. SFIG also submitted a comment letter in September 2013 on Money Market Fund Reform. If you are interested in joining this working group, please contact

Treasury Official MIchael STEGMAN DELIVERS REMARKS REGARDING “Reigniting the Private Label Mortgage-backed Securities Market”

On Monday, Counselor to the Secretary for Housing Finance Policy, Dr. Michael Stegman delivered remarks before a Bipartisan Policy Center Panel “Reigniting the Private Label Mortgage-Backed Securities (“PLS”) Market.”

During his speech, Dr. Stegman explained why “a robust non-agency, non-government guaranteed residential mortgage securitization market alongside the other three channels mentioned is in the best interest of families, credit markets, and the economy.” The three other channels he identified as necessary for a healthy residential mortgage market were the following:

  • An agency (Government Sponsored Enterprises) channel with private capital in a first-loss position;
  • A Federal Housing Administration channel with a more direct government guarantee to serve low- and moderate-income families; and
  • A whole loan execution held on bank and private sector balance sheets.

He also pointed out how “non-agency securitization has the potential to expand access to credit and offer more efficient pricing to creditworthy borrowers while providing pricing discipline to the market as a whole. It would also reduce the concentration of mortgage credit risk within the banking system and in other government-supported channels, which is another strong policy imperative.”

Dr. Stegman also highlighted the importance of timing when addressing the “structural flaws holding back the PLS market,” and affirmed that now is the time to act “so that when conditions are more favorable to securitization, there will be a healthy appetite for product at the most competitive possible prices to consumers.” 

SFIG has launched Project RMBS 3.0 to address the many structural issues in the PLS market and recently released its first edition Green Papers. Dr. Stegman will be the keynote speaker at SFIG and IMN’s Private Label RMBS Reform Symposium to be held in New York on November 12, 2014. For further information on Project RMBS 3.0 or the Symposium, please contact


The International Organization of Securities Commissions (“IOSCO”) today published the consultation report Risk Mitigation Standards for Non-centrally Cleared OTC Derivatives, which proposes nine standards aimed at mitigating the risks in the non-centrally cleared Over-The-Counter (“OTC”) derivatives markets.

The proposed risk mitigation standards would contribute to the G20 effort to strengthen the OTC derivatives market in the wake of the global financial crisis.  One of the key planks of the G20 reform programme has been to encourage the central clearing of standardised OTC derivatives. However, a substantial proportion of OTC derivatives are not standardised and hence not suitable for central clearing. The proposed standards are aimed at these non-centrally cleared OTC derivatives.

The proposed risk mitigation standards are expected to bring about three main benefits:

  1. Promoting legal certainty and facilitating timely dispute resolution;
  2. Facilitating the management of counterparty credit and other risks; and
  3. Increasing overall financial stability.

The proposed risk mitigation standards, which are developed in consultation with the Basel Committee on Banking Supervision (“BCBS”) and the Committee on Payments and Market Infrastructures (“CPMI”), would complement the margin requirements developed by the BCBS and IOSCO in September of 2013 in strengthening the non-centrally cleared OTC derivatives market.

Comments on the proposals should be submitted on or before October 17th 2014.

If you are interested in joining SFIG’s Derivatives in Securitization Task Force, please contact


On Tuesday night, the House passed, by a vote of 327-97, H.R. 5461, a bill sponsored by Congressman Andy Barr (R-KY) and Congressman Gary Miller (R-CA) that would amend the Dodd-Frank Act and allow the Federal Reserve to tailor capital requirements for insurance companies that are designated systemically important financial institutions (“SIFIs”). The bill would also include certain exemptions for collateralized loan obligations under the Volcker Rule, changes for swaps rules for non-financial firms and exclusions for fees charged by third-party companies under the Consumer Financial Protection Bureau’s (“CFPB”) Qualified Mortgage Rule.  

Specifically, the House bill includes language from the following bills passed by the House Financial Services Committee: 

  • The Business Risk Mitigation and Price Stabilization Act.  The language would exempt nonfinancial entities that enter into a swap or a security-based swap transaction from meeting certain margin requirements when the transaction is designed to offset losses or gains in other investments. 
  • The Mortgage Choice Act.  Under the CFPB’s Qualified Mortgage/Ability-to Repay (“QM”) Final Rule, points and fees charged to consumers in connection with a mortgage loan cannot exceed three percent of the loan amount. The language would modify the definition of “points and fees” for QM loans by excluding fees charged by title companies affiliated with lenders, as well as insurance and taxes held in escrow.
  • The Restoring Proven Financing for American Employers Act.  The bill prohibits the Volcker rule from requiring divestiture of any debt securities of Collateralized Loan Obligations issued before January 31, 2014.

The Senate passed S. 2270 in July that would address capital requirements for insurance companies designated as SIFI’s. However, the Senate did not include the additional language included by the House. 


Today, the Subcommittee on Oversight and Investigations held a hearing entitled Oversight of the Financial Stability Oversight Council (“FSOC”) which examined the FSOC operations, policies, and procedures, according to a hearing memo. The one-panel hearing included the following witnesses: Patrick Pinschmidt, FSOC Deputy Assistant Secretary and Nicole Clowers, Government Accountability Office Director.

On Friday, the Federal Reserve announced the creation of a Financial Stability Committee ("Committee"), according to a Wall Street Journal article. The Committee, which will focus on monitoring the financial system for emerging problems and analyzing how the central bank should respond, will include Federal Reserve Vice Chairman Stanley Fischer and Governors Daniel Tarullo and Lael Brainard.

The Committee emerged out of a discussion that took place this summer between Federal Reserve Chairman Janet Yellen and Mr. Fischer, her deputy who will run the Committee. The Committee is one of seven committees that will oversee the Federal Reserve Board’s workload and has not met yet.


On September 10th, Congresswoman Maxine Waters (D-CA), Ranking Member of the House Financial Services Committee, released a proposal that would make sweeping reforms to the consumer reporting system, according to a recent Housing Wire article. These reforms include eliminating medical debt from credit reporting, which the Consumer Financial Protection Bureau (“CFPB”) previously found in a report to be a poor indicator of people’s likelihood of repaying normal debts because of the unusual and unexpected high-dollar amounts involved.

The draft proposal, “Fair Credit Reporting Improvement Act of 2014,” will also enhance requirements on the consumer reporting agencies (“CRAs”) and those that provide information to CRAs. This will guarantee consumers have the capacity to ensure the information on their credit reports is complete and accurate.

Congresswoman Waters stated:

Credit reports are no longer just used exclusively by lenders in making a credit decision. More and more, credit reports are used in a variety of ways, from employment decisions, to determining a consumer’s ability to rent a home, buy a car, or purchase insurance. A person’s credit report is too important in determining access to a wide array of opportunities for these reports to contain inaccurate and incomplete information. This proposal addresses many of the flaws with the existing consumer reporting system, by making common-sense changes that enhance consumers’ rights, create more transparency over the consumer reporting and credit scoring process, and increase the accountability of credit reporting agencies, furnishers, and companies that develop credit scoring models and formulas.

Some of the key provisions in this draft proposal include: providing relief to millions of borrowers who were victimized by predatory mortgage lenders; ending the unreasonably long time periods that adverse information can remain on a person’s credit report; giving consumers the tools to truly verify the accuracy and completeness of their credit reports; eliminating punitive credit scoring practices; and giving distressed private student loan borrowers the same chance to repair their credit as federal student loan borrowers. 


In his recent testimony before the Senate Committee on Banking, Housing, and Urban Affairs, Federal Reserve Board (“FRB”) Governor Daniel Tarullo said that staff are contemplating a number of measures to enhance the resiliency and resolvability of U.S. global systemically important banks (“GSIBs”) and address the risks posed to financial stability from reliance by financial firms on short-term wholesale funding. To address resiliency, the FRB is crafting a forthcoming proposal that would impose graduated common equity risk-based capital surcharges on GSIBs which, according to Tarullo, will be higher than the levels required by the Basel Committee on Banking Supervision (“BCBS”) and directly take into account each U.S. GSIB’s reliance on short-term wholesale funding. To address GSIBs resolvability, the FRB is working with global regulators, including the Financial Stability Board, on a proposal that would require the largest, most complex banks to maintain a minimum amount of loss absorbency capacity beyond the levels mandated by the BCBS.

Governor Tarullo placed significant emphasis on the importance of measures such as the liquidity coverage ratio and net stable funding ratio (“NSFR”) to reducing the risks arising from reliance on short-term wholesale funding. According to Tarullo, one of the three initiatives FRB staff are currently contemplating involves developing an NSFR rule to strengthen liquidity requirements that apply when a bank acts as a provider of short-term funding to other market participants. The FRB is also working on a proposal to establish numerical floors for collateral haircuts in securities financing transactions (“SFT”), including repos and reserve repos, securities lending and borrowing, and securities margin lending, to address concerns relating to SFT matched book activity.


THURSDAY, September 18, 2014
11:00 a.m. (EST)
Indianapolis, IN
Additional details available here


THURSDAY, September 18, 2014
11:00 a.m. - 1:00 p.m. (EST)
538 Dirksen Senate Office Building


THURSDAY, October 16, 2014 – FRIDAY, October 17, 2014
FDIC L. William Seidman Center
Hove Auditorium
3501 Fairfax Drive
Arlington, VA 22226
Registration is available here

This symposium will focus on the recent research on consumers’ capabilities, knowledge, preferences, and experiences in the market for financial products and services, as well as the effects of public policy interventions and new regulations on consumers, households, communities, and financial institutions.



SFIG has a number of Committees and Task Forces meeting and working on many topics of interest to the securitization industry. Please email us for more information, including how to join.

SFIG is pleased to share this edition of its newsletter with our members, as well as our supporters in the structured finance community. To ensure that you receive future editions of the newsletter, please visit our website or email us to learn more about membership opportunities.

Contact Information

Richard Johns Executive Director

Kristi Leo Investor Relations

Sonny Abbasi Director of MBS Policy

Sairah Burki Director of ABS Policy

Michael Flood Director of Advocacy

Mary Robinson Policy Manager

Alyssa Acevedo Policy Analyst

Amanda Bateman Policy Analyst

Jennifer Serpas Office Manager

Allison Creswell Executive Administration

1775 Pennsylvania Ave. NW
Suite 625
Washington, DC 20006

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