The recently-released Senate financial reform package contains a number of provisions designed to prevent a recurrence of the performance problems that triggered the recent financial crisis. The most widely discussed initiative requires "securitizers" to retain a minimum of 5% of the credit risk of any sale or conveyance of assets through the securitization process.

To its credit, the bill does attempt to differentiate between various types of assets, while giving regulators broad authority to exempt some classes of issuers. (This almost certainly will include the GSEs, although the current bill does not specifically exempt Fannie Mae or Freddie Mac from the requirements.) By focusing on the securitizers of ABS (and originators that sell assets to them), the bill also exempts sales of non-securitized assets.

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