FDIC’s revised securitization safe harbor rule takes effect about May 4

A final rule that removes a disclosure requirement by amending the “safe harbor” for financial assets transferred in connection with a securitization transaction is slated for publication Wednesday in the Federal Register and will take effect 60 days after that – on or about May 4.

The final rule was approved Jan. 30 by the Federal Deposit Insurance Corp. (FDIC) Board on a split vote of 3-1 (with Board Member Martin Gruenberg dissenting). The rule eliminates a requirement that securitization documents used by insured institutions comply with regulation AB of the Securities and Exchange Commission where the regulation by its terms would not apply to the issuance of obligations backed by such financial assets.

The final rule amends FDIC regulations adopted in 2010, in particular with regard to residential mortgage-backed securities (RMBS). The stated policy objective is to remove an unnecessary barrier to securitization transactions (especially RMBS). It removes a disclosure requirement established by the 2010 rule.

Reg lookup: Securitization Safe Harbor Rule