A Treasury Department proposal aimed at reforming the private-label securities market would give federal regulators some flexibility in setting risk retention standards for the banks.

The legislative proposal Treasury recently sent to Congress requires securitizers to retain at least 5% of the credit risk, which cannot be sold or hedged. However, regulators can make "exceptions" and "adjustments" for banks provided they retain some risk and it leads to sound underwriting practices.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.