Two lawsuits are targeting the entities that help issue asset-backed securities (ABS) for JP Morgan Chase & Co. and Capital One Financial Corp. The issue in both cases is whether restrictions around bundling credit card loans into bonds could potentially threaten the market by forcing banks to “keep more risk on their balance sheets and stifling their ability to extend credit”. A Bloomberg article mentioned the August 13 brief SFA wrote with the Bank Policy Institute, saying that “a court decision that the bundled debt can be held to state-level restrictions could ‘dramatically upset’ the lending industry”. The plaintiffs have until September 17 to respond to the motion to dismiss the Chase case, and defendants have until September 27 to serve a motion to dismiss the Capital One lawsuit. SFA’s amicus brief in support of the defendants in the Chase case is available here.
Read more via Bloomberg.