New York — With roughly 100 audience members in attendance, panelists at the American Securitization Forum Sunset Seminar agreed that the root of the trustee problem lies in what investors ask of trustees during a deal's inception. The phrase "The devil is in the detail," was echoed by numerous panel members commenting on explicit description of duties versus implied responsibilities of the trustee.
Trustees in ABS and MBS have adopted a "don't ask, don't tell" policy in regards to their actions and responsibilities. As a result, "if a specific action isn't included in a deal's documentation, don't expect it to get done," said Fitch Ratings Managing Director Kevin Duignan.
The panelists, including Moody's Investors Service Senior Vice President Claire Robinson, who in February issued a report titled Moody's Re-examines Trustees' Role in ABS and RMBS, described the trustee's role in the day-to-day life of a securitization as "minimal." But Robinson added that Moody's stance in scrutinizing trustee behavior lies mainly in a post-bankruptcy situation.