LSTA Executive Director Bram Smith Retiring

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Bram Smith is retiring as executive director of the Loan Syndications & Trading Association effective at year’s end, the trade group announced Thursday.

Smith has been with the LSTA for nine years, joining as interim executive director in September 2008 before he was installed as permanent ED in December 2009.

Smith is a 40-year veteran of the U.S. loan industry, and had previous stints as a senior managing director at Bear Sterns and managing director/partner in Morgan Stanley’s loan capital markets business. He spent 18 years managing loan syndications, sales and trading at Bankers Trust and previously served on the board of the LSTA.

During his tenure at the helm of the LSTA, he steered efforts to aid in the recovery in new issuance of collateralized loan obligations after the financial crisis brought deals to a halt.

One of his chief missions was also to reduce the time it takes to settle loan trades in the secondary markets – periods that, at their peak, lasted up to three weeks. That quest began to bear fruit last year as the LSTA introduced changes that removed a perverse incentive for loan buyers to drag their feet in bringing funds to closing.

Smith also led the LSTA’s efforts to shield CLOs from Dodd-Frank Act regulations, but ultimately lost on that front. The LSTA, for example, pitched a battle against applying the Volcker Rule to CLOs, but regulators ultimately enforced Volcker against CLOs in 2014 that required them to divest of high-yield bonds that represented banned proprietary trading collateral for regulated banks (the primary investors in CLOs).

Opposing Dodd-Frank’s risk retention standards also became a focal of LSTA lobbying and legal efforts (including a federal lawsuit that is in the appeals process) during Smith’s term. He testified before a congressional subcommittee testimony in 2011, arguing the standards were misapplied to CLO sponsors, who generally do not have the capital to retain 5% collateral stakes in their transactions.

The rules eventually went into effect last December on new-issue CLOs, but regulators decided to grant an exemption grandfathering managers of existing deals from having to take on skin in the game.

Smith made the case early and often on the safety and soundness of CLOs, which he argues do not represent the high-risk securities such as the residential mortgage-backed securities that were a root cause in the 2008 meltdown. Unlike the overheated market for subprime home loans securitizations, CLOs  were “actively managed, have the interests of managers aligned with the note holders, pricing information, and a track record of strong performance, among other aspects,” he stated in a member newsletter in 2010.

Smith holds a master's degree in business administration from Harvard as well as in international affairs from the Fletcher School of Law and Diplomacy at Tufts University. He is a graduate of the U.S. Air Force Academy, and served as a helicopter pilot in the Aerospace Rescue and Recovery Service.

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