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MBA Praises the Fed's Risk Retention Report
Oct 21, 2010

Robert E. Story Jr., CMB, chairman of the Mortgage Bankers Association (MBA), has issued the following statement reacting to a study by the Board of Governors of the Federal Reserve System on the impact of credit risk retention requirements and Financial Accounting Statement (FAS) Nos. 166 and 167 on asset-backed securitizations. "The report closely parallels our own recommendations that we made to the Fed, principally that financial regulators ought to tailor risk retention requirements to specific asset classes and recognize risk retention practices that already exist. "Specifically, we are pleased to see the Fed recognize that one-size-fits-all risk retention requirements, applied across the board to all asset classes, are unlikely to achieve the objective of improving the asset-backed securitization process and would further be unlikely to sufficiently protect investors from losses associated with poorly underwritten loans. "We would urge the regulatory agencies that have been tasked with implementing the risk retention provisions of the Dodd-Frank Act to incorporate the suggestions in the Fed's report and we look forward to working with them to ensure that the risk retention requirements for residential and commercial mortgage-backed securities are tailored specifically to the unique characteristics of these markets." Section 941(c) of the Dodd Frank Act required the Federal Reserve to conduct the study, which can be found here. A copy of a letter containing MBA's recommendation to the Fed can be found here. For more information, visit
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