On May 20, 2020, the Federal Reserve Bank of New York (“FRBNY” or the “Fed”) announced the first subscription date, June 17, 2020, in connection with the Term Asset-Backed Securities Loan Facility (“TALF 2020”). The Fed also issued revised Frequently Asked Questions (“FAQs”) and the new Master Loan and Security Agreement (“MLSA”) for the program,
Jan C. Stewart
TALF 2020 Update: Federal Reserve Bank of New York Releases FAQs and Revised Term Sheet
On May 12, 2020, the Federal Reserve Bank of New York (the “Fed”) issued new Frequently Asked Questions and a revised term sheet in connection with the Term Asset-Backed Securities Loan Facility (“TALF 2020”). This Legal Update summarizes the FAQs and the revised term sheet, highlighting key changes and noting where further information or materials…
Federal Reserve Releases TALF FAQs: Here are the Highlights
On May 12, 2020, the Federal Reserve (Fed) published updates to the term sheet for the Term Asset-Backed Securities Loan Facility (the TALF), and FAQs regarding the TALF, including additional details regarding borrower and collateral eligibility.
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Federal Reserve Revises New TALF Program Term Sheet
The Federal Reserve issued a revised term sheet on April 9, 2020, for the Term Asset-Backed Securities Loan Facility (“TALF 2020”) that was initially announced on March 23, 2020. This Legal Update summarizes the revised terms and conditions applicable to TALF 2020 and updates a Legal Update we previously issued on March 24, 2020.
Market Participants Request Expansion of TALF 2.0
On March 23, 2020, the Federal Reserve Bank of New York (“FRBNY”) established the Term Asset-Backed Securities Loan Facility (“TALF 2.0 Program”) to support the flow of credit to consumers and businesses. The FRBNY expects that the TALF 2.0 Program will enable the issuance of asset-backed securities (“ABS”) backed by underlying credit exposures in specified…
Potential Volcker Rule Changes Announced
On January 30, 2020, five federal financial regulatory agencies published the long awaited notice of proposed rulemaking (the “NPR”) to revise certain aspects of the Volcker Rule (Section 13 of the Bank Holding Company Act) with respect to the treatment of covered funds. The NPR follows over 2 ½ years of the agencies’ consideration of changes to the Volcker Rule, which was originally prompted by the June 2017 Treasury Report that solicited changes to ease the compliance burden on banks. The NPR includes several changes
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FDIC Adopts Changes to Securitization Safe Harbor Rule
Since its adoption in 2010, the Federal Deposit Insurance Corporation’s (the “FDIC”) securitization safe harbor rule, 12 C.F.R. § 360.6 (the “Rule”), which relates to the treatment of financial assets transferred in connection with a securitization or participation transaction, has required that securitization documents require compliance with Regulation AB of the Securities and Exchange Commission (“SEC”), 17 C.F.R. §§ 229.1100 et. seq. (“Regulation AB”) even in circumstances where Regulation AB by its terms would not apply to the issuance of obligations backed by such financial assets. On January 30, 2020, the FDIC finalized and adopted changes (the “Adopted Change”) to certain provisions of the Rule to eliminate such requirement where Regulation AB would not otherwise apply to the related securitization transaction.
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Magistrate Judge Recommends Dismissal in Chase Issuance Trust Usury Lawsuit
A United States Magistrate Judge for the United States District Court, Western District of New York, today issued his report and recommendation on the defendants’ motion to dismiss in Petersen et al. v. Chase Card Funding, LLC et al., No. 1:19-cv-00741 (W.D.N.Y. June 6, 2019). The Magistrate Judge recommended dismissal of both the plaintiffs’ usury and unjust enrichment claims on preemption grounds, stating that “the preemption analysis boils down to this: does the application of New York’s usury statutes to these defendants ‘prevent’ or ‘significantly interfere’ with Chase USA’s power to sell or assign the receivables generated by its credit card accounts?”. The Magistrate Judge answered this question in the affirmative, reasoning that “since applying New York’s usury statutes to defendants would prevent Chase USA’s ability to sell or assign the receivables from its credit card accounts, they are preempted.”
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Industry and advocacy groups respond to proposed changes to FDIC’s securitization safe harbor rule
In July, the Federal Deposit Insurance Corporation (the “FDIC”) proposed a change (discussed here and here) to certain provisions of its securitization safe harbor rule (the “Rule”) to eliminate the requirement that the securitization documents for non-grandfathered bank-sponsored securitizations not otherwise subject to Regulation AB (i.e. non-public transactions) require compliance with the disclosure and periodic reporting requirements of Regulation AB. If adopted in its proposed form, this would significantly ease the compliance burden associated with non-public bank-sponsored ABS issuances, potentially resulting in a greater volume of such transactions.
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Recent credit card ABS disclosure trends
In July, the Federal Deposit Insurance Corporation (the “FDIC”) proposed a change (discussed here) to certain provisions of its securitization safe harbor rule (the “Rule”), which relates to the treatment of financial assets transferred in connection with a securitization or participation transaction. The proposed change would eliminate the requirement under the Rule that disclosure documents for bank-sponsored securitizations not otherwise subject to Regulation AB’s disclosure requirements (i.e. non-public transactions) comply with Regulation AB. This could significantly ease the compliance burden associated with non-public bank-sponsored ABS issuances, potentially resulting in a greater volume of such transactions.
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