While the number of community banks entering the securitization market has increased over the last two years, the federal banking agencies are keeping a tighter reign on them in light of recent bank failures.

The Office of the Comptroller of the Currency and Federal Deposit Insurance Corp., along with two other agencies, recently issued guidelines on asset securitization and are actively considering regulatory restrictions that would limit or eliminate retained interest from regulatory capital calculation. In a related development, the banking agencies also came out with guidelines on subprime lending earlier this month.

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