Tough Times for Lenders : Financial Services Lawyer & Attorney : Winstead Law Firm : Finance, Banking, Bankruptcy

The tentative time line for the House-Senate reconciliation conference committee covering the financial regulatory reform legislation is the following: begin to meet during the week of June 7, 2010, with the goal of having a final Bill ready for the President’s signature by the July 4 recess.

With that quick time line in mind, here is a quick up-date on:

• High-level comparisons of the House Bill and the Senate Bill
• The membership of the House-Senate Reconciliation reconciliation conference committee
• Last hope for inclusion of covered bonds in the final bill

Comparisons of the House Bill and the Senate Bill:
As you know, the two bills are very, very long.  And I'm sure that some where in DC, Congressional staffers are preparing a detailed comparison of the two bills (as part of the reconciliation process). So, we'll have that good comparison shortly.  In the interim, here are high-level comparisons by the Associated Press and by PBS.

Membership on the Reconciliation Conference Committee:
Here is the list of the Senators on the conference committee (8 Democrats and 5 Republicans; eight members of the Banking Committee and five from the Agriculture Committee):

• Tim Johnson (D-SD)
• Jack Reed (D-RI)
• Chuck Schumer (D-NY)
• Chris Dodd (D-CT)
• Blanche Lincoln (D-AR)
• Tom Harkin (D-VT)
• Pat Leahy (D-VT)
• Dick Shelby (R-AL)
• Bob Corker (R-TN)
• Michael Crapo (R-ID)
• Judd Gregg (R-NH)
• Saxby Chambliss (R-GA)

And here is the list of 8 Democratic Representatives proposed for inclusion on the committee by Representative Barney Frank (D-MA) (I have not seen a list of the 5 Republicans to be named by him):

• Barney Frank (D-MA)
• Carolyn Maloney (D-NY)
• Paul Kanjorski (D-PA)
• Luis Gutierrez (D-IL)
• Maxine Waters (D-CA)
• Melvin Watt (D-NC)
• Gregory Meeks (D-NY)
• Dennis Moore (D-KS)

No doubt, this list will be finalized in the next week.

Final Hope For Covered Bonds: As noted by the Covered Bond Investor and by CNBC, the U.S. Covered Bonds Act (introduced in the House by Scott Garrett [R-NJ] and co-sponsored by Spencer Bachus [R-Ala.] and Paul Kanjorski [D-Pa.]) did NOT make it into the financial reform bills passed by either the House or the Senate.

Both of these blogs note that the following is the only hope for covered bonds becoming part of the final financial reform bill:

• The appointment of Representative Garrett, Bachus and\or Kanjorski onto the House-Senate conference committee
• And then their ability to convince the committee to add the covered bond bill into the compromise bill adopted by the committee

So, with Representative Dodd's appointment of Representative Kanjorski to the committee, covered bonds still might be part of a solution to the credit crisis, and a viable product in the U.S.— if he can convince the committee to add covered bonds into the final bill.

As I've noted before, my perspective is that covered bonds need to be included in the financial reform bill—simply because the new CMBS 2.0 will not be sufficient to meet the credit needs of the commercial real estate finance industry.

If you see it differently or have additional information, please post a comment below.
 

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(Blogging from the MBA Servicing & Technology Conference . . . )

One phrase describes the majority of the content today at the sessions attended by me at the MBA Servicing & Technology Conference:  "Change is now . . . we just don't know all of the details."

My take away is that some very significant work needs to be completed before the "new" CMBS 2.0 will be implemented to any significant level.

Here are some examples from sessions today:

• Reconciliation of H.B. 4176 and S. 3217:  Representative Carolyn Maloney (D-NY) talked about the importance of the CRE market to the broader economy, and briefly mentioned the status of the reconciliation of the House Bill H.R. 4176 and the Senate Bill S. 3217 (prior posting on two bills).  My take on her talk?  Short on details on the all-important reconciliation, and not enough guidance on "where" we are going . . . but then this morphed into the general theme of the day.  (The Congresswoman nailed it: so, change is now . . . we just don't know all of the details.)
• REMIC Rules Need More Change - Unilateral Releases of Collateral:  One session raised the continuing need of the IRS to modify collateral release rules found in changes to real estate mortgage investment conduit (REMIC) regulations (Treasury Decision 9463).  This topic has been the focus of much discussion because the Treasury rule had the effect of imposing additional restrictions on collateral releases, when compared to the prior law - even when the release is expressly permitted under the loan documents.  Currently, the rumor is the that the IRS is prepared to issue a new announcement resolving this problem. So, change is now . . . we just don't know all of the details.
• FDIC Safe Harbor Only Part of the Story:  While the FDIC on May 11 issued a proposed rule to clarify the safe harbor protection in a conservatorship or receivership for financial assets transferred by an insured depository institution in connection with a securitization or participation, the FDIC is not the only regulatory body with a voice on this issue.  For example, FASB rules 166 and 167 may require consolidation of those same assets with the bank that originated the securitized loans.  ln addition, the SEC and the IRS may weigh in on the same issue.  So, change is now . . . we just don't know all of the details.
• Regulation AB - Much Work Ahead:  While this summary is short, the SEC's proposed changes to Regulation AB is @ 667 pages, and contains @ 300 questions.  One session here at the Conference devoted 15 minutes to generally describe the challenges in the proposal; and an entire session during Tuesday at the Conference will be devoted to (literally) working on it.  And much, much more work is being done by industry volunteers in analyzing and responding to the proposed changes.  So, change is now . . . we just don't know all of the details.

Some heavy listing needs to be accomplished.

Question: are you seeing this differently?  Please post a comment below.

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For the next couple of days, I'll be giving you summaries from the MBA's Servicing and Technology Conference.  As you might suspect, the sessions focus on the 'hot' topics.

Here are the sessions that have my attention:

• Federal legislation, regulatory reform, and the political climate, including REMIC reform, banking reform, risk-based capital requirements, the "new" CMBS 2.0, the rating agencies, and accounting changes
• the current economic market, including maturing loans, property markets, originations (or lack thereof) and unemployment
• increased loan surveillance
• using technology to improve the servicing process (I'm on the panel covering this topic)
• using social networking tools with a business focus
• using technology tools for mitigating risk
• challenges facing the "new" CMBS 2.0
• loan defaults and workouts
• lessons learned (what works and what could be better)

This is my tenth time to attend this conference.  As you see from these topics, this conference always is relevant and very practical.  I'll be back later today with my first summary.

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