Spank Dodd-Frank

Dodd-Frank Act - Credit Risk Retention Provision

The U. S. Securities and Exchange Commission and five other federal agencies have solicited public comment on a proposed regulation which would require entities securitizing debt to retain a portion of each securitization. The expressed intent of this “credit risk retention regulation” is to cause those packaging debt into securities to be more sensitive to the quality of the total package of each of their securitizations (a la eating your own cooking).

I’ve been reading the public comments, on this proposed regulation, as they have been posted on the Securities & Exchange Commission website. Yesterday, I read a very good comment letter written by Charles Lehmann (dated April 26). I thought you also might find Mr. Lehmann’s letter interesting. (Link to comment letters on proposed rule file s-7-14-11 )

On a slightly different note, over the past few weeks I’ve been watching the archived hearing testimony from the Financial Crisis Inquiry Commission (FCIC) and various congressional committees which claim to be attempting to find the causes of the housing bubble and the ensuing financial crisis. It’s become obvious to me that the FCIC and The U.S. Congress are far too political to reveal the true causes of the housing bubble and the financial crisis. While reading Mr. Lehmann’s comment letter I became curious about one of the footnotes on the letter. The footnote referenced a video presentation by John Allison, former Chairman and CEO of BB&T Corporation.

I watched the video of Mr. Allison’s presentation and was thoroughly impressed with his grasp of the subject and the detail of his explanation. If you have any interest in The U.S. Financial Crisis: Causes and Consequences I suggest you watch the video. (You may want to skip the introductory comments which take six minutes and twenty nine seconds).
1 For a comprehensive explanation of the factors that contributed to the most recent financial crisis, see John Allison, Former Chairman and CEO, BB&T Corporation, Address at the 2011 Federalist Society Annual Student Symposium: The U.S. Financial Crisis: Causes and Consequences (Feb. 26, 2011). Available at: