The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) this week have proposed changes to rules that would reaffirm the power of national banks and federal savings associations, and state-chartered banks, respectively, to securitize, sell, assign or transfer loans without impacting the enforceability of the interest rate on a loan. The Structured Finance Association (SFA) is pleased that the OCC and the FDIC propose to provide much needed clarification on this issue.
Through the securitization and whole loan markets, more families, individuals and businesses have access to essential credit at a lower cost. Approximately $13.1 trillion, representing more than 50 percent of U.S. household debt, was financed by securitization last year.
Recent court cases have threatened the market’s ability to perform the fundamental functions of serving consumers and communities in a safe and sound manner. At the core of this week’s announcements, the rulemakings proposed by the OCC and the FDIC would address this threat by codifying 150 years of precedent that helped make U.S. capital markets the most significant in the world. By removing the growing legal uncertainty facing secondary market investors and other industry participants these proposals would promote a healthy and stable securitization and secondary whole loan market. The changes would allow banks to continue to manage their balance sheets and free up capital to lend to new borrowers. Without this level of clarity, the cost of consumer and small business credit would continue to increase and access to credit would continue to decline.
SFA represents over 370 institutions who are all active, dedicated participants in the responsible allocation of credit throughout our economy. We support the efforts of the OCC and FDIC to eliminate unsafe and imprudent lending practices that harm consumers and we look forward to continuing to work with the OCC, FDIC, CFPB and other regulatory bodies, consumer groups, and our markets.