Two industry groups on Wednesday urged the Senate Banking Committee securities insurance and investment subcommittee to ensure that banking regulators redraft their securitization rule proposals, particularly on defining a "qualified residential mortgage."
A QRM would be exempt from the requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act that securitizers generally keep "skin in the game" by retaining five percent of the value of the loans they securitize. The provision is among several mechanisms designed to prevent toxic loans from tainting the lending system.
American Securitization Forum executive director Tom Deutsch said one key reason for wanting a new set of rules on securitizing mortgages, particularly the skin-in-the-game proposal, is that there are too many asset classes with too much complexity in each.
Another reason to redraft the rules is that, as currently written, the approval of all the relevant regulators is needed for any changes even
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