ABS East 2012, organized by Information Management Network (IMN), is on track to be a little bigger and more upbeat than last year’s conference. Still, the budding optimism will be tamped down by the frustrations many in the industry feel about regulations.
"I expect a modestly improved tone at ABS East this year though the triple threat of a looming fiscal cliff, ongoing Eurozone instability and continuing regulatory uncertainty should help keep the level of enthusiasm in check,” said Kevin Duignan, managing director at Fitch Ratings.
The reasons for attendants to shed at least some of their post-crisis anxieties are compelling. Issuance in a few sectors, for one, is up, and in a meaningful way. Standard & Poor’s predicted on October 16 that auto securitization issuance would total $100 billion this year, a 47% increase from 2011. Meanwhile, issuance in esoterics is forecast to top $20 billion and hit a post-crisis record, according to Barclays.
Uptick in Investor Attendants
Attendance should reach around 3,000 participants, said Jade Friedensohn, a senior vice president at IMN, who pointed to an especially bright spot: more investors. Friedensohn expects about 500 buysiders to show up, from the approximately 300 who made it last year.
Even in the housing market — which has been the target of a good deal of angst in the securitization sector — there are glimmers of hope.
“The tone will benefit from the real firm stabilization of housing prices and housing markets in general, the high degree of interest in buying distressed assets, the REO-to-rental programs and, more broadly, lots of capital coming into the housing market to buy distressed assets and rent them out,” said Mark Fleming, chief economist at CoreLogic. “I think there’s more interest and positive feelings there because of these things weren’t there [last year.]”
Even so, Fleming said that are still a number of issues keeping the private label RMBS market from coming back in any serious form. He posed a question that many participants and panelists will be grappling with: “How does private capital return in the form of a securitization market when it’s currently dominated by the GSEs and the FHFA [Federal Housing Finance Agency]?”
Regulations Still a Focus
Regulations, of course, will be blamed for some of the problems. The results of the presidential election will have a bearing on this area as a potential Republican victory, especially if it were accompanied by the GOP taking both houses, could mean the repeal of some or all of these rules. On the other hand, a number of regulations could remain in place regardless of the outcome.
Jason Kravitt, a senior partner at Mayer Brown, said some of the regulatory issues bound to spur conversation included the topic of risk retention, especially for QRMs (Qualified Mortgage Loans); the Volcker rule and its impact on ABCP vehicles; commodity pools; and risk-based capital, particularly as it relates to the simplified supervisory formula approach, the 1,250% risk-weight default rule and the due diligence rule.
And this list is hardly exhaustive. Despite a more sanguine mood, panelists tackling regulatory issues — including SEC officials, who will speak at ABS East for the first time — have an ocean of topics to wade through. — FO
