Risk Retention on SEC Agenda

The Securities and Exchange Commission will consider changes to its regulations to ensure better disclosures and protections for investors in private-label mortgage-backed securities. At an April 7 meeting, the commissioners are expected to discuss risk retention, which requires the MBS issuers to retain a portion of the credit risk. The Obama administration supports risk retention and Congress is working on legislation that would require securitizers to retain 5% of the credit risk. Industry groups are very concerned that risk retention, combined with recent changes to accounting and capital rules, will make a revival of the private-label securities market very difficult. In a letter to Senate Banking Committee leaders, 21 banking, housing and real estate groups urged the lawmakers to weigh the entirety of changes so legislative reforms "support, and not impede, a recovery in the securitized credit markets that fuel our overall economy."