ABS

A large majority of banks participating in the Home Affordable Refinancing Program have restricted their refis to mortgages they already service or own, according to a July survey of senior loan officers by the Federal Reserve.

Two new collateralized loan obligations priced last week, bringing the total volume for the year to date to roughly $21 billion, according to Bank of America Merrill Lynch.

The Jersey City, N.J.-based financial services firm that lost approximately $440 million due to a technological glitch on the NYSE at the start of the month has received an amicable tender from fellow Wall Street faithful.

A $25 million penalty collected by the Consumer Financial Protection Bureau (CFPB) last month is focusing attention on an aspect of the fledgling agency's powers that was long overlooked but now carries large political significance.

Manager Activity: Autos Book Runner Amount (US$ Mil) Rank Mkt.

The factors would appear to be in place. The Dodd-Frank Wall Street Reform and Consumer Protection Act's Volcker Rule places new restrictions on the big Wall Street banks' bond inventories that, along with new Basel III capital rules, should increasingly push trading of fixed-income, including ABS, to electronic markets.

First Europe, now the U.S.

Standard & Poor’s stated that cigarette consumption is the most significant factor in determining the credit strength of tobacco securitizations.

For years, U.S. banks, and especially the largest ones, have dreaded the seemingly inevitable arrival of new and more burdensome regulatory capital requirements. U.S. banking regulators' proposal to revamp those requirements, issued in mid-June, should dispel many of their fears, although the proposal is likely to result in extra work for U.S. banks and may put them at a disadvantage to global competitors in the ABS market.

A sharp pick up in the issuance of CLOs this year hasn't resulted in much reshuffling in the ranks of credits held by these deals. In fact, there was no movement in the top five names between the first and second quarters.

"Industry consolidation outweighs new issuance as the key driver for shifts in the manager rankings, in the U.S. and Europe," Moody's analysts wrote in the newly released July edition of "CLO Interest," which includes CLO manager league tables as of June 30, 2012, updated for the first time since August 2011.

With the rated securitization market staging a comeback and bank financing more readily available, investors in ABS placed in the traditional private market are increasingly confined to smaller deals backed by more esoteric assets.

As the New York Federal Reserve moves closer to completing the winding down of its Maiden Lane (ML) vehicles, investors face a falloff in inventory volumes. This poses a further challenge in this yield-starved environment.

Commercial banks, still busy with the business of tidying up their portfolios and shrinking balance sheets, are slowly getting back to small business lending. However, the void created by their long absence has been increasingly filled by both smaller regional banks and nonbank lenders. It's the latter that are driving securitization because it increases their access to funding, allowing them to grow lending volumes.

Scheduled to launch later this year, the European DataWarehouse will, for the first time, house loan-level data on a wide range of loans backing the region's ABS. The European Central Bank is the information repository's biggest client and champion.

Ed DeMarco, acting director of the Federal Housing Finance Agency (FHFA), said Tuesday that struggling borrowers whose loans are owned by Fannie Mae and Freddie Mac will not be allowed to wipe out part of their mortgages under a government program, defying pressure from the Obama administration and top Democratic lawmakers.

Several years back Ocwen Financial was both a subprime lender and held a thrift charter—two businesses that have long since gone down the road of extinction.

Several large and regional banks have disclosed in recent days what their capital ratios would look like if Basel III were in effect now and early results show that First Horizon National, Huntington Bancshares, SunTrust Banks and TCF Financial would take the biggest capital hits if they do not take steps to change their asset mix.

In its July legal update, Dechert described the re-launching of China's ABS program as a “milestone” in the development of ABS in the country.

Regulation and Reform