Securitizers would have to retain at least 5% of the credit risk with some exceptions for loans that meet certain regulatory standards, according to a bill introduced by Senate Banking Committee chairman Christopher Dodd, D-Conn.

The financial services regulatory reform bill that Dodd plans to mark up next week allows federal banking regulators and the Securities and Exchange Commission to reduce the risk retention on loans that exhibit high quality underwriting. However, the direction given the regulators seems to be very vague when clarity is needed, one source said.

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