In a Bank of America Merrill Lynch conference call held yesterday, Theresa O’Neill, an asset-backed strategist from the firm, said that participants in the consumer ABS market need to keep a careful eye on certain regulatory developments related to securitization, namely the bank capital rules, risk retention, as well as any new rules from the Consumer Financial Protection Bureau (CFPB).

O’Neill discussed how the new capital rules do not favor higher quality assets. She said that asset classes, including autos, mid-ticket equipment, and rate reduction bonds, that have an attachment point below or at the 12.5 level at issuance would generally incur higher capital charges.

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