Like a pesky cold, the loan market just can’t shake the “skin in the game” provision — a risk retention rule in the Dodd-Frank bill that would require “a securitizer” to retain 5% of the assets of a securitized vehicle.

Following a Federal Reserve study in October, which acknowledged that all structured vehicles are not created equal and shouldn’t be treated as such, market participants expected CLOs to be exempted from the 5% rule. So when the FDIC announced its proposed regulations the last week of March, lumping CLOs in with securitizations, market participants found themselves taken aback. 

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