At the American Securitization Forum’s (ASF) Sunset Seminar last week, panelists agreed on the potential problems that the proposed regulatory requirement on loan level data disclosure will bring.
Kenneth Morrison, a partner at Kirkland & Ellis, stated that he felt the loan level disclosures were “way overboard” and displayed a “deep lack of understanding” on the part of regulators.
One speaker addressed the “significant privacy issues” that would result from the disclosed information, saying the requirement would make it “easy to mine this for individual identities”. Once data concerning the type of an auto is available, he said as an example, it wouldn’t be difficult to determine who bought the vehicle.
Harley-Davidson Financial Services’ Director of Securitization Julia Landes echoed this sentiment by “strongly objecting” to the forced disclosure of such data. This would easily help the public identify both issuers and consumers. She also said that she has never had an investor ask for loan level data, and that this information is not even currently disclosed to the ratings agencies.
Panelists were particularly worried about the impact of this type of disclosure on equipment ABS. Geographic data made available under this requirement would easily single out farms in secluded areas that are usually the lone consumers in their respective regions.
Julie Schlueter, a capital markets manager with CNH Global, believed that such a requirement would have an enormous impact on the market due to the advantage it would provide to competitors. She referred to the loan level data as “something we would never disclose” to others, and stated that she didn’t feel it was necessary information for investors to have for either equipment or auto ABS. Schlueter suggested that there are many other things to analyze that would give a better idea of credit performance rather than loan level data.
