J. Paul Forrester

In the wake of several widely reported LIBOR and other benchmark rate manipulation scandals, reflected in headline-grabbing stories of litigation and official inquiries and investigations,¹ followed in some cases by eye-popping related settlements,² policymakers have responded with varied attempts at benchmark rate reforms, which as of early April 2013 remain a work-in-process.

On March 22, 2013, almost a year to the day after they issued the proposed new Interagency Guidance on Leveraged Lending, the three federal banking regulators—the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (collectively, the Agencies)—issued the final version of this Interagency Guidance.

Banking & Finance partner Paul Forrester (Chicago) is quoted on how planned risk-retention rules could affect the collateralized loan obligation market in the US.

Banking & Finance partner Paul Forrester (Chicago) is quoted in an article discussing the US asset-backed security market outlook for 2013.

The Division of Swap Dealer and Intermediary Oversight of the Commodity Futures Trading Commission (CFTC) issued interpretation and no-action letter No. 12-45, which does three things: it provides interpretive clarification that some securitization entities are not “commodity pools”; it provides conditional no-action relief for certain legacy securitization entities; and it provides time-limited no-action relief until March 31, 2013 for non-exempt securitization entities to allow for more time for further dialogue with CFTC Staff.

Banking & Finance partner Paul Forrester (Chicago) is quoted on three closely-watched components of the Dodd-Frank Act.

Banking & Finance partner Paul Forrester (Chicago) is quoted in an article discussing how the US Commodity Futures Trading Commission is answering concerns over treatment of physical gas storage and transportation agreements under the Dodd-Frank Act.

On October 11, 2012, the Division of Swap Dealer and Intermediary Oversight (Division) of the Commodity Futures Trading Commission (CFTC) issued interpretation letter No. 12-14, “Request for Exclusion from Commodity Pool Regulation for Securitization Vehicles” (the CFTC Securitization Interpretation Letter), to the American Securitization Forum (ASF) and the Securities Industry and Financial Markets Association (SIFMA).

A bylined article co-authored by Banking & Finance partner Paul Forrester (Chicago) summarizes the recent activity in US structured finance markets and comments on the potential impact of various pending regulatory initiatives that may affect the future prospects for these markets.

In the August 30, 2012 Executive Order “Accelerating Investment in Industrial Energy Efficiency,” President Obama directs the Departments of Energy, Commerce and Agriculture, and the Environmental Protection Agency, in coordination with the National Economic Council, the Domestic Policy Council, the Council on Environmental Quality and the Office of Science and Technology Policy, to coordinate policies to encourage investment in industrial efficiency in order to reduce costs for industrial users, improve US competitiveness, create jobs and reduce harmful air pollution.

On August 13, 2012, following the recent conclusion of a strategic review launched in October 2010, the Equator Principles Association (EPA) released the latest draft of the Equator Principles (EP III), and related FAQ, for stakeholder consultation and public comment as phase II in the process to revise the Equator Principles.

In Bayerische Landesbank, New York Branch and Bayerische Landesbank, plaintiffs-appellants v. Aladdin Capital Management LLC, defendant-appellee,¹ the US Court of Appeals for the Second Circuit considered whether the manager of a synthetic collateralized debt obligation transaction (CDO) owed any direct obligations or duties under the related portfolio management agreement (PMA) to the plaintiffs, as investors in the CDO. The defendant was the manager under the PMA.

Banking & Finance partner Paul Forrester (Chicago) quoted on how most traditional insurance products would be exempted from the Dodd-Frank rules under a new US Commodities Futures Trading Commission ruling.

In this edition of Mayer Brown’s Global Energy Industry Review, we begin by highlighting key revisions of the Association of International Petroleum Negotiators’ 2012 Joint Operating Agreement (JOA). It is expected that this new JOA will take over as the new international industry standard, and our article examines how some of the changes reflect the latest commercial realities of the upstream oil and gas sector, particularly in light of events such as the Deepwater Horizon tragedy and the implementation of the UK Bribery Act 2010.

Banking & Finance partner Paul Forrester (Chicago) quoted on the Department of Defense investing in biofuels and other alternative energy sources.

Following the precedent of the Obama administration's Smart from the Start initiative to speed offshore wind energy development off the Atlantic Coast, on March 30, 2012, the Obama administration and five of the eight Great Lakes littoral states signed a memorandum of understanding (MOU) intended to streamline the efficient and responsible development of offshore wind energy resources in the Great Lakes. The related announcement states that the MOU will enhance collaboration between federal and state agencies to speed review of proposed offshore wind energy projects and, in particular, to develop an action plan that sets the priorities and recommended steps for achieving efficient and responsible evaluation of wind power projects in the Great Lakes region.

Bylined article by Chicago Banking & Finance partner Paul Forrester discusses issues in the bank financing markets for infrastructure and the prospects for European project bonds.

On August 31, 2011, the United States Securities and Exchange Commission (SEC), in Release No. IC-29779 (Release) provides advance notice of a proposed rulemaking for proposed amendments to Rule 3a-7 under the Investment Company Act of 1940 (ICA or 40 Act). Simultaneously, the SEC proposed to withdraw its earlier 2008 proposal to amend Rule 3a-7, which was published at 73 FR 40124 (July 11, 2008). The revisions were proposed, at least in part, to satisfy Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which generally requires that references to credit ratings in the SEC’s rules and regulations be reviewed by the SEC and, if practicable, replaced with substitute standards of creditworthiness.

US Secretary of the Interior previously announced a “Smart From the Start” initiative for Atlantic offshore wind development that is anticipated to dramatically reduce timelines for related environmental permitting.

Article by Government & Global Trade partner David Bloom (Washington, DC), Banking & Finance partner Paul Forrester and Banking & Finance associate Nadav Klugman (both Chicago) discusses state feed-in-tarriffs.

The SEC and various banking and housing regulators have issued amuch anticipated set of proposed rules requiring securitization sponsors to retain a portion of the credit risk in the assets that they securitize. In this memorandum,we summarize the proposed rules, discuss a number of provisions that are problematic or unclear and offer a preliminary analysis of the impact of these rules on the securitizationmarket.

On March 3, 2011, the US Securities and Exchange Commission (SEC), in Release No. 33-9193; IC-29592, proposed removing references to credit ratings from nationally recognized statistical rating agencies (NRSROs) in certain of its rules and forms under the Investment Company Act of 1940, as amended (the Investment Company Act). The SEC proposed the revisions pursuant to Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act).

In two separate, but related, notices of proposed rulemaking (NOPRs) published in the Federal Register on February 8, 2011, the US Commodity Futures Trading Commission (CFTC) has proposed rules to implement the requirements of Section 731 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which added new section 4s to the Commodity Exchange Act (CEA). The proposed rules regarding swap trading relationship documentation would be contained in a new 17 CFR Part 23. The first of these NOPRs (the Primary Swap Documentation NOPR) proposes rules that require the CFTC to prescribe standards for swap dealers (SDs) and major swap participants (MSPs) related to the timely and accurate confirmation, processing, netting, documentation and valuation of swaps. The second NOPR (the Swap OLA Provision NOPR) requires the inclusion of an orderly liquidation provision in the swap trading relationship documentation. Comments on each of the NOPRs are due on or before April 11, 2011.

Article 122a of the Capital Requirements Directive (CRD), added to the CRD on September 16, 2009, imposed a number of new requirements on EU credit institutions in relation to “securitizations.” In addition, Article 122a required the Committee of European Banking Supervisors to provide written guidelines to clarify and harmonize its application by different member states. These Guidelines were published on December 31, 2010, on the day before the requirements of Article 122a became effective (for new securitizations issued on and after January 1, 2011).

In its proposed rule, the Commodity Futures Trading Commission (CFTC) proposes new requirements governing the elective exception to mandatory clearing of swaps for those swap counterparties meeting the requirements under section 2(h)(7) of the Commodity Exchange Act (CEA), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

At least 18 states in the United States are considering or reported to be considering the adoption of feed-in-tariffs, or FiTs, to stimulate renewable energy development. While many states have renewable portfolio standards in place, some legislators must feel that their state’s RPS do not provide sufficient incentive for targeted renewable energy development.

The Dodd-Frank Act requires the US Commodity and Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC) to define certain so-called “key” terms used in Title VII of the Dodd-Frank Act.1 In Release No. 34-634522 (the Release), the CFTC and the SEC, in consultation with the Board of Governors of the Federal Reserve System, have now proposed definitions for the following terms:

Title VII of the Dodd Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), entitled “Wall Street Transparency and Accountability Act,” contains significant reforms of the over-the-counter derivatives markets. The actual extent of many of these reforms may turn on the extent of regulatory “reach” under Title VII, which in turn will be determined by the meaning to be given to certain key terms used in Title VII. Importantly, Section 712(d) of the Dodd-Frank Act requires that the Commodities and Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), in consultation with the Federal Reserve Board, jointly further define these key terms.

As was required under Section 766 of the Dodd-Frank Act, the US Securities and Exchange Commission (SEC) in Release 34-63094 has adopted Interim Final Temporary Rule 13Aa-2T under the Securities Exchange Act of 1934, as amended (Exchange Act). This new rule will require the reporting of all security-based swap transactions entered into before July 21, 2010, whose terms have not expired as of that date (pre-enactment unexpired security-based swaps).

Bylined article by Chicago Banking & Finance partner Paul Forrester discusses mezzanine financing for infrastructure.

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, titled as the Wall Street Transparency and Accountability Act of 2010 (the “Act”), eliminates the exemption from regulation under the Commodity Exchange Act for most over-the-counter (OTC) energy derivatives; it imposes a new regulatory regime for OTC derivatives, which will, at a minimum, increase the transaction costs to US transportation companies, utilities, manufacturers, energy producers and other businesses actively hedging their exposure to fluctuating energy prices; and it could potentially subject some such businesses to the same increased regulatory oversight, including minimum capital requirements and minimum initial and variation margin requirements, as is mandated for those participants in the OTC derivatives market that qualify as “swap dealers” or “major swap participants.”

On August 20, 2010, the US Commodity and Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC) published their joint Advance Notice of Proposed Rulemaking (ANPR) in the Federal Register seeking public comments on the so-called “Key Definitions” of the Wall Street Transparency and Accountability Act (the Act), which is Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically, the ANPR requests comments on the proposed definitions of the following terms:

On July 28, 2010, Illinois Governor Pat Quinn signed Public Act 96-1348 (the Act). The Act amends the Illinois Public Utilities Act and permits a public utility to avoid otherwise applicable requirements to obtain a certificate of public convenience and necessity (CPCN) in order to do any of the following types of high voltage transmission projects (collectively, the Exempt HVSL Projects):

The newly signed Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) will have a significant and wide-reaching effect on the finance markets generally and collateralized debt obligations (CDOs) and collateralized loan obligations (CLOs) specifically. In particular, the risk-retention requirement in the Dodd-Frank Act could prove to be problematic for CDOs and CLOs.

Many studies have identified the US’ need for tens of billions of dollars of investments in new electric transmission facilities. Facilities are need to improve system reliability, to eliminate choke points in the transmission grid that cause consumers to pay higher rates, to move renewable power to markets and to address the requirements of the “Smart Grid.”

The US Securities and Exchange Commission has released a massive rulemaking proposal relating to asset-backed securities (ABS). The broad categories of changes proposed include...

Article by Paul Forrester discusses the future of collateralized debt obligations.

Paul Forrester quoted on US derivative regulatory reform having potential international impact.

Paul Forrester quoted on structured debt. Subscription required.

Paul Forrester quoted on consumer confidence in the Japanese derivatives market.

Paul Forrester quoted on replacing CO2 storage. “If you push 20 years' worth of CO 2 in the ground and it leaks out, you're back 30 years. We need it to stay there for ever,” he said.

Paul Forrester quoted on the securitization market. “There are still many questions that need to be analyzed and understood about the role of asset-backed securities in the financial crisis,” he said.

The Department of Energy (DOE) issued two anticipated loan guarantee program solicitations on July 29, 2009, regarding (i) projects that employ innovative energy efficiency, renewable energy and advanced transmission and distribution technologies and (ii) electric power transmission infrastructure investment projects.

This comprehensive, authoritative and multidisciplinary practitioner's manual is structured in a way that the principles of arranging, servicing, financing and exit strategies of such transactions will be dealt with. It contains country reports for specific jurisdictions and describes local law requirements which need to be considered when implementing performing and non-performing loan transactions.

August 2008 - New applications for stranded-cost securitization in the fossil-fuelled power sector.

(an earlier version was published in The Journal of Structured Finance, Summer 2004)