CrunchedCredit : Capital Markets Finance and Real Estate Attorneys

Ahh, Miami. I'd say it's good to be back here at the Fontainebleau for ABS East 2011 but it's been pouring and exceptionally windy so my time outdoors will be limited.  Dechert attorneys Mac Dorris, Ralph Mazzeo, John Timperio, Cindy Williams, Larry Berkovich, Lorien Golaski, Andrew Pontano and I hosted a well-attended cocktail party Sunday night. It was great to catch up with our friends/clients in person.

Monday morning began with a general session where some blurbs about risk retention from this October 14 New York Times article were projected on two very large screens. I later attended the “Evolving Risk Retention Requirements” panel before lunch. It's been a while since the joint regulators released the credit risk retention NPR back in March of this year. In response, hundreds of comment letters were submitted. Click here for the ones posted by the SEC. We have blogged repeatedly on this topic here at CrunchedCredit.

Recently there has been chatter that the regulators may re-propose a new risk retention rule for comment in lieu of promulgating a final rule.

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The final day of ABS East in Miami closed on Tuesday late afternoon and we’re back home with no suntans.

Those of us who didn’t overdo it on Monday evening (we won’t mention names) started Day 3 at a panel discussion titled “Lessons from the Financial Crisis: Required Steps for Rebuilding the Investor Base and Future Sources of Liquidity.”

Talking about RMBS, the consensus is that the economics just aren’t working for issuers, let alone the other impediments to getting deals done these days. Current interest rates on jumbo mortgage loans are too low. Over the next six months, however, at least one panelist thinks spreads will come in and the dearth of alternative investment grade securities that are attractive to investors will help the RMBS sector.

One panelist said that too much leverage cracked the world economy and if institutions become so highly levered again, it will happen again. Insofar as regulations are concerned, many of us agree with him that it is irresponsibility that needs to be regulated.
 

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Dechert attorneys kicked off ABS East by hosting a Day 1 cocktail party at the Fontainebleau that was well attended by our friends and clients.

Day 2 of ABS East is underway. The Monday opening panel-- Restoring Confidence and Rebuilding the Industry: The Role of Securitization-- drew a pretty full house.

The general consensus is that the regulatory bodies are in the way and will cause delay in the recovery of the securitization market. I won't go so far as to claim it wasn't broke and didn't need some fixing, but it's clear the fixing to come is going to take a while. Without definitive rules, potential issuers can not evaluate the cost to enter the market. If we had a more targeted response to our problems from Congress and the regulators we could avoid this delay.

On the resi front, clearly the GSEs have crowded out private issuance, which has been facilitated by Congress and the Fed. Whereas commercial real estate found a natural bottom, the feeling is that resi never did. And, as one panelist put it, "distressed loans continue to pose a lingering cloud preventing meaningful recovery." The question was posed as to why there was nothing much after Redwood in the resi space. Again, the GSEs are dominating that space. Conforming loan limits have never been higher and it's increasingly more difficult to even qualify for a jumbo loan under current underwriting criteria. With CMBS, it's possible to get a reasonable number of loans. RMBS requires many more loans and there's competition for the best loans.

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We’re looking forward to ABS East October 3-5. More than 2,200 attendees are expected to gather at the Fontainebleau Miami Beach to discuss current topics in securitization.  Hot topics this year include Lessons from the Financial Crisis, Restoring Confidence and Rebuilding the Industry, the Role of Securitization in Revitalizing the Economy, Assessing the Changing Face and Needs of ABS Investors, the Role of the GSEs, and U.S. Regulatory Developments.  Dechert attorneys Patrick Dolan, Mac Dorris, Ralph Mazzeo, John Timperio, Cindy Williams, Joe Beach and Laurie Nelson will be in attendance to participate and meet with our friends and clients.

Tuesday morning, October 5, Dechert partner John Timperio will participate in the “Required Steps for Rebuilding the Investor Base and Future Sources of Liquidity” panel.  Tickets are going like hotcakes for this “don’t miss” Tuesday morning opener.

Stay tuned as we will be blogging live from Miami.

By Ralph Mazzeo and Laurie Nelson.

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