FDIC Acts on Proposed Risk Retention Rule for Asset-Backed Securities

March 29, 2011

The Federal Deposit Insurance Corporation’s (“FDIC”) Board of Directors today gave its approval to a proposed rule (“Rule”) regarding implementation of the asset-backed securities (“ABS”) risk retention provisions of Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 941 was drafted with the view that securitizers will act more prudently if they have “skin in the game.” The Rule contains provisions relating to securitization of a wide range of assets, including a general 5% risk retention requirement, that are to be adopted jointly by the FDIC, the Office of the Comptroller of the Currency (“OCC”), the Federal Reserve Board (“FRB”) and the Securities and Exchange Commission (“SEC”).

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