Asset-Backed Securities Regulation - Comment Letter - American Bar Association - November 17, 2010

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Dodd-Frank Timeline, Issuer Review of Assets in Asset-Backed Securities, SEC
Final Rule Issue Effective Date Compliance Date
January 25, 2011 March 28, 2011 December 31, 2011

Issuer Review of Assets in Offerings of Asset-Backed Securities
November 17, 2010

In the letter, the ABA comments on the proposed provision that an asset-backed securities issuer perform a review of the assets, on issuer diligence in registered offerings and on third-party diligence reports.

The ABA:

  • "[does] not agree that the SEC should mandate that an ABS issuer perform any specific types of review;"
  • believes that the the same type of diligence should not apply to every type of structured transaction;
  • agrees that issuers should be allowed to rely on third parties in preparing reviews;
  • "[does] not believe that the Commission's approach to proposed Item 1111(a)(7) is mandated by §945 of the Dodd-Frank Act. Congress adopted §945 and §932 of the Dodd-Frank Act at the same time, while using different language. We believe that these provisions should be read to require different kinds of conduct, in order to give meaning to the different language Congress chose to employ. Had Congress meant to require disclosure of the findings and conclusions of the issuer’s required diligence review, it would (and could easily) have said so;"
  • believes that the breadth of the definition for the term "asset-backed security" and recommends the exclusion of "inappropriate" categories, including covered bonds, hybrid capital securities, and pooled investment vehicles, as well as other asset types;
  • urges a reconsideration of certification rules, particularly the requirement of issuers becoming "experts," under §15E(s)(4).



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