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CRE Finance World, Winter 2013

The Year Ahead in DC — New Faces in Congress, Regulatory Bodies GSE Reform. With the ascension of incoming Chairman Jeb •Volcker Rule — While regulators are struggling to reach an Hensarling, we expect the debate surrounding GSE reform to agreement on what is considered proprietary trading, they have reignite. Emboldened by retaining the majority in the House, signaled that they plan to issue a final rule in the first quarter. Hensarling will bring his opposition to government involvement with the two troubled agencies (and, as of recently, FHA) to the •Regulation AB — The SEC is highly likely to issue a final rule for fore. CREFC and our coalition partners are already working to disclosures on structured products immediately following a final ensure that the solution for multifamily is separate and distinct risk retention rule. Once retention is finalized, the SEC will be from the prescription for single-family. While we don’t expect able to finalize disclosures necessary to ensure investors have Congress to reach an agreement next year, we will have a better a handle on the nature of the retention. eye into their intent and the likely supporters. Last congress saw a handful of bills related to both GSE reform and private housing •“Franken Amendment” — The SEC is expected release a study market reforms. We expect similar bills to appear shortly after required by Dodd-Frank on implementing the Franken Amend- Congress convenes in January. ment for initial credit ratings for structured products in the first half of the year, and rumors are circulating that staff has already Regulation circulated a draft at the Commissioner lever. As a reminder, the Franken Amendment states that the SEC can move forward with On the regulatory front the SEC, Treasury and FHFA are expected randomly assigning credit rating agencies to perform initial ratings to see changes in leadership. The departure of Mary Shapiro at the for structured products if it is deemed the best solution to remove SEC signals a likely agency stalemate for implementing regulations conflicts of interest from the current issuer pays model. with commissioners now deadlocked at 2-2, until the White House appoints and the Senate approves her replacement. Furthermore, •Basel III Capital Standards — Regulators have expressed their Secretary Geithner has signaled that he plans to leave Treasury desire to finalize increased capital standards in 2013. Congress after the fiscal cliff negotiations. is watching closely, as there is a tension between ensuring the United States keeps up with international capital standards, while Secretary of the Treasury is also the Chair of the Financial Stability rural Members of Congress are greatly concerned about the Oversight Committee, which acts as an arbiter between regulators rules’ potential affects on community banks. on joint rulemakings. Therefore, the President’s choice for Treasury Secretary will play a significant role in implementing joint rulemakings As you can see, decisions made in Washington in 2013 will play a such as risk retention. Finally, Ed DeMarco, acting Director of the large role in the future of our industry. FHFA, is also assumed to be replaced at some point. Mr. DeMarco has disagreed with the White House on such issues as mortgage To stay informed, look for our updates in the CREFC Weekly write-downs. Whomever the White House appoints will play a Briefing, sign up for our free monthly government relations update significant role in housing finance reform. calls, or simply contact myself (mflood@crefc.org) or Marty Schuh (mschuh@crefc.org) and we are more than happy to bring you, our That said, the industry should expect to see the following regulations members, up to speed. implemented in 2013: •Risk Retention — Regulators have signaled that they plan to release either a re-proposal or final rule in the first quarter. The industry will have two years from the date of any final rule to comply with the standards. A publication of Winter issue 2013 sponsored by CRE Finance World Winter 2013 7


CRE Finance World, Winter 2013
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