Sellers of bonds backed by mortgages, auto loans, and commercial buildings will have to give investors more details to judge the quality of loans they have packaged under rules approved today by the U.S. Securities and Exchange Commission (SEC).
The SEC's five commissioners unanimously approved rules mandated by the Dodd-Frank Act after investors were burned by soured debt sold by Wall Street before the 2008 credit crisis. The new requirements apply to the $750 billion market for private mortgage-backed securities, which imploded in 2008 and financed just 1 percent of new mortgages in 2013.
Banks eligible to expedite sales of asset-backed bonds with minimal SEC review will have to provide an executive's certification that documents given to investors are accurate. They also will have to provide a process to review soured assets to determine whether they should be repurchased.
“The reforms before us today will add critical protections for investors and strengthen our securities markets by targeting products, activities, and practices that were at the center of the financial crisis,” SEC Chair Mary Jo White said in a statement before the vote. “Investors will have powerful new tools for independently evaluating the quality of asset-backed securities and credit ratings.”
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
