• Treatment of Securitizations Under Proposed Risk-Based Capital Rules
  • June 29, 2012 | Authors: Andrew B. Kales; William R.B. Springer
  • Law Firms: Bingham McCutchen LLP - Washington Office ; Bingham McCutchen LLP - New York Office
  • As adopted by individual countries, the Basel III Capital Accord constitutes a broad revision of bank capital regulation.  Basel III imposes on banks broad new capital and risk weighting requirements on many asset classes that will significantly affect the bank's cost in undertaking structured finance transactions.

    In early June 2012, U.S. bank regulators proposed new rules that adopt many of the Basel III regulations.  These new rules significantly alter the risk weighting for securitization exposures and the assets underlying such securitizations, while also imposing new diligence and disclosure obligations on the banks. The precise risk-weighting effect on many common securitizations is extremely complex and requires close attention to structural detail of every step of the transaction.

    Our Summary of the Effects of the Proposed Capital Rules on Securitization is designed to provide readers with a resource that highlights the major areas of the proposal as they relate to securitization exposures, while focusing on details that are likely to impact banks active in the securitization market.