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Risk Retention
Treasury recommends that banking regulators expand qualifying underwriting exemptions across eligible asset-classes through notice-and-comment rulemaking.
Treasury recommends that collateralized loan obligation (CLO) managers who select loans that meet prespecified “qualified” standards, as established by the appropriate rulemaking agencies, should be exempt from the risk retention requirement.
Treasury recommends that regulators review the mandatory five-year holding period for third-party purchasers and sponsors subject to this requirement. To the extent regulators determine that the emergence period for underwriting related losses is shorter than five years, the associated restrictions on sale or transfer should be reduced accordingly.
Treasury reiterates its recommendation that Congress designate one lead agency from among the six that promulgated the Credit Risk Retention Rulemaking to be responsible for future actions related to the rulemaking.
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