In the Dodd Frank Act, Congress directed several federal agencies, including the Board of Governors of the Federal Reserve System (FRB) and the Securities and Exchange Commission (SEC), [i] to jointly promulgate a regulation that requires securitizers of asset-backed securities to retain at least 5 percent of the credit risk of the underlying loans. 15 U.S.C. §78o-11(c)(1)(B)(i). In response, the agencies promulgated the Credit Risk Retention Rule (CRR Rule), 79 Fed. Reg. 77,601 (Dec. 24, 2014). The CRR Rule fosters appropriate underwriting of securitized loans by requiring securitizers to retain “skin in the game.” S. Rep. No. 111-176, at 129. The Loan Syndications and Trading Association (LSTA) sued the FRB and SEC challenging the application of the CRR Rule to a distinct segment of the asset-backed securitization market, known as collateralized loan obligations (CLOs).... [Read more...]
The wisdom of the administrative state, which has its roots in the Progressive and New Deal Eras, is much debated today in all three branches of the federal government. Given the stakeholders who benefit from regulation and those who seek to dismantle the regulatory-agency model, there is every reason to think that suits challenging decisions of the United States, including the president and federal agencies, will increase in the coming years for two reasons. Those who benefit from regulation will resist deregulation, in part, by challenging
in court an agency’s justification for repeal of regulations where repeal is inconsistent with the agency’s congressional mandate. Those favoring deregulation will challenge final agency decisions not only to slow or reverse the impact of regulation generally but also to advocate for overturning case law that requires the courts to defer to an agency’s interpretation of statutes it implements and its accompanying regulations.
In ancient Greece, speech was thought to be superior to writing. Socrates said that true knowledge and understanding is not served by writing because it leads to misunderstanding and cannot be questioned.... [Read more...]
Fallout from the Great Recessions continues to work its way through the courts. The latest is Perry Capital LLC v. Mnuchin, No. 14-5243 (D.C. Cir.), a high-profile case in which shareholders... [Read more...]
On February 16, 2017, the D.C. Circuit vacated its decision in PHH Corp. v. CFPB, No. 15-1177, and ordered that the case be reheard en banc (meaning reheard by all 11 judges on the court)... [Read more...]
President Trump set forth the Administration’s Core Principals for Regulating the U.S. Financial System in an Executive Order, dated February 3, 2017. There is a lot to like in these... [Read more...]