It Just Gets Better and Better: Reg AB Redux


I just can’t schedule enough time in my day to worry about all the things that seem to demand to be worried about. As I write, this week the Dow closed 630+ down one day and bounced 600 points the next. Yikes. Between that, the debt ceiling and downgrades, Dodd-Frank, the interminable drumbeat of hostility towards Wall Street and business coming out of the White House, the mess in Europe, the falling dollar, insanely low interest rates, high unemployment, the fact that somehow corporate America seems to still be earning bucket loads of money, and, in general the discomfiting disconnect between our still positive every day deal world and the angst, anxiety and drumbeat of awful news in the macro market, what should we think? It makes my hair hurt.

But, drawing on my deep and boundless reserve of existential anxiety, I’ve now found a few free moments to worry about the SEC’s new re-proposal on shelf eligibility for asset-backed securities. This missive was released (pdf) on July 26, 2011, and comments are due by October 4, 2011.

A year ago, hundreds of CMBS industry professional spent hundreds of hours of time wrapping our brains around AB 2.0, which in the SEC’s own words was a proposed rule that would “address the problems . . . by giving investors the tools they need to accurately assess risk and by better aligning the interests of the issuer with those of the investor.” We worked with CREFC and MBA to provide comments, which I think were thoughtful and constructive. I had hoped, perhaps naively, that this should have formed the basis of an ongoing dialogue between regulators and market participants to address what everyone agreed were problems in the structured finance environment. And then…nothing. Crickets. The comment disappeared in the Stygian opacity of the SEC regulatory process and dialogue never happened. We waited.

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