CRE Finance Council seeks strict adherence to Dodd-Frank for securitization
The CRE Finance Council doesn't want any new rules or regulations included in the sweeping Dodd-Frank financial reform to limit the ability of entities to originate and securitize loans. In a letter to Treasury Secretary Timothy Geithner, the council said the exclusion by Congress of securitization from the Volcker rule, which intends to prohibit proprietary trading by certain financial institutions, was purposeful and should be kept in mind as the new rules are written and executed. The CRE Finance Council said it wants regulators to strictly adhere to Dodd-Frank, which states the rule shouldn't be construed to limit or restrict lawful securitizations that are "conceptually different" from the high-risk activities the rule is designed to address. "While Dodd-Frank explicitly exempts securitization, CRE Finance Council urges regulators to carefully consider rules to ensure that a broad application does not negatively affect the CMBS market, which is critical to a commercial real estate recovery," Chief Executive John D’Amico said. "We are starting to see a timely revival of the CMBS market, but policymakers must take extra care with rules that could unintentionally impact its fragile state." In October, the Federal Deposit Insurance Corp. announced plans to bring $500 million of CMBS to market before the end of January. Meanwhile, the National Credit Union Administration has begun divesting itself of about $50 billion of troubled assets it acquired upon taking a handful of credit unions into conservatorship. Some analysts said the decision by the Federal Reserve to purchase another $600 billion of Treasury securities "gives the green light for yield" in mortgage-backed securities, which may prompt some deals to get through the pipeline. CRE Finance Council sent the letter to Geithner because he is chairman of the Financial Stability Oversight Council, which sought comment on implementation of the rule that is named for former head of the Federal Reserve, Paul Volcker. Regulators received about 8,000 letters about the Volcker rule, according to an article in The Wall Street Journal. Write to Jason Philyaw.