The American Securitization Forum (ASF) released a statement today applauding the House Financial Services Committee’s approval of legislation aimed at stabilizing the ABS market.
The bill, sponsored by Rep. Steve Stivers (R-Ohio), calls specifically for the restoration of Rule 436(g), which was repealed upon the passage of the Dodd-Frank Act last year. The regulation exempts rating agencies from “expert” liability when assigned ABS credit ratings.
The press release cited the freezing of the ABS market last summer that occurred last summer upon implementation of the repeal, pointing out that the sector did not return to normalcy until the Securities and Exchange Commission (SEC) issued a “temporary no-action letter” restoring the ratings agencies’ exemption from liability.
The ASF reiterated that the ABS market was in strong need of certainty in order to operate in a “sound and robust manner” and serve as a source of “critical credit.”.
“It is now crucial for the full House of Representatives and the Senate to pass the Stiver’s bill to ensure permanent stability for the ABS markets. We strongly encourage lawmakers to act decisively on this critical matter."