Today, the Federal Deposit Insurance Corporation (the “FDIC”), the Federal Housing Finance Agency (the “FHFA”), and the Office of the Comptroller of the Currency (the “OCC”) each adopted a final rule (the “Final Rule”) implementing the credit risk retention requirements of section 941 of the Dodd-Frank Act for asset-backed securities (“ABS”). The Federal Reserve Board, the Securities and Exchange Commission, and the Department of Housing and Urban Development (together with the FDIC, FHFA, and OCC, the “Joint Regulators”) are expected to adopt the Final Rule tomorrow. The risk retention rules were intially proposed by the Joint Regulators in March 2011 and re-proposed in August 2013 (the “Re-Proposal”). The Final Rule will become effective one year from the date of publication in the Federal Register for residential mortgage-backed securities (“RMBS”) and two years from the date of publication in the Federal Register for all other ABS.

As required by the Dodd-Frank Act, the Final Rule generally requires securitizers in both public and private securitization transactions to retain not less than 5% of the credit risk of the assets collateralizing any ABS issuance.