Commercial Mortgage Securities Association (CMSA) has announced its support of U.S. Comptroller of the Currency John C. Dugan’s recent remarks on the need for a vital and robust securitization market, agreeing with several assertions that certain accounting and regulatory standards may limit credit availability.

“I fully recognize the potential for counterproductive action and for swinging the pendulum too far in the accounting and regulatory response," Comptroller John Dugan said in a speech before an American Securitization Forum Conference outside Washington last week. “If we do not appropriately calibrate and coordinate our actions, rather than reviving a healthy securitization market, we risk perpetuating its decline – with significant and long-lasting effects on credit availability.”

While the OCC did say it supports accounting and regulatory changes that more appropriately align securitizations with risk, it conceded changes make it more difficult for these transactions to qualify as true sales. CMSA agrees with OCC Comptroller Dugan’s notion that an examination of each asset type as a means for incentivizing better underwriting may have benefits, particularly since the regulator recognized that risk retention itself may not be the only solution.

CMSA remains concerned that risk-based capital changes, FDIC-proposed rulemaking and the proposed skin-in-the-game provision could, when combined, impede the recovery of the securitization market. CMSA is very encouraged that the OCC recognizes several factors, including certain accounting reforms, that could adversely affect capital levels when securitized assets are brought onto a balance sheet.

“We believe the Administration’s proposed new and unprecedented financial reforms must provide certainty and confidence in our markets and support, rather than impede, efforts to restore private lending and investing critical to a commercial real estate recovery,” said Patrick C. Sargent, president of the CMSA. “With the number of key distinctions between CMBS and other asset-backed securities, we support OCC Comptroller Dugan in recognizing the prudence required when fashioning broad securitization-related regulatory reforms.”

CMSA remains fully engaged in efforts to urge policymakers to ensure that the final regulatory reform package does not negatively impact commercial real estate but, rather, is customized to reflect the unique nature of the commercial mortgage-backed securities (CMBS) market.

For more information, visit www.cmsaglobal.org.