On October 27, 2009, Senators Baucus and Kerry, together with Representatives Rangel and Neal, introduced the Foreign Account Tax Compliance Act of 2009 (the “Act”). The bill is the product of consultation between Congress and the US Treasury Department (Treasury) and is intended to curb the abuse of offshore bank and investment accounts by US taxpayers.
On November 12, 2009, the Board of the FDIC approved an interim rule that provides some crucial transitional relief relating to recent changes in US accounting standards for securitizations (see our June 22, 2009, Client Update “Big Changes to Securitization Accounting”). One of the key impacts of the accounting changes is that banks (among other entities) will no longer be able to achieve sale treatment in securitizations of credit card and other receivables using many traditional structures.
Mayer Brown, a leading global law firm, has garnered a top ranking for legal advisors on asset backed deals in the latest U.S. capital markets review issued by Thomson Reuters.
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.
9 October 2009 – The 2010 edition of IFLR1000, a guide to the world’s leading financial law firms, ranked Mayer Brown in 15 practice categories. Four practices were given top-tier rankings: Hong Kong Restructuring & Insolvency; Thailand Restructuring & Insolvency; United States Capital Markets – Structured Finance & Securitization; and Vietnam Banking & Finance. In addition, 26 partners were ranked as leading lawyers. IFLR1000 rankings are based on extensive independent research, and provides analysis of the best financial law firms operating in more than 100 markets worldwide.
On September 22, 2009, the Office of Chief Counsel of the Internal Revenue Service (the “Service”) issued a memorandum to the Director of Field Operations for Financial Services in Manhattan (the “Memorandum”) setting forth its position and legal analysis with respect to certain lending activities undertaken by foreign corporations. The Memorandum concludes that a foreign corporation has income that is effectively connected with a banking, financing, or similar business activity within the United States (and thus is subject to net basis US federal income tax) when origination activities are performed in the United States by an agent of the foreign corporation.
Jason Kravitt quoted on the new FASB accounting rules, saying that by implementing the recent NPR on regulatory capital in response to the accounting changes in FAS 166 and 167, the regulators are throwing “securitization into the water.”
We have previously written about legislative and regulatory developments facing the over-the-counter (OTC) derivatives market. These development include
a number of bills introduced in Congress as well as the framework outlined by the Department of the Treasury in the June white paper, “Financial Regulatory Reform: A New Foundation,” for a new regulatory regime for OTC derivatives to be implemented by legislation.
On August 11, 2009, the US Bankruptcy Court for the Southern District of New York denied five motions to dismiss bankruptcy cases filed by certain bankruptcy remote, special purpose subsidiaries (SPEs) of General Growth Properties, Inc. (GGP). The motions were filed by or on behalf of secured lenders to the SPEs (Movants) who argued that the bankruptcy filings were inconsistent with the bankruptcy remote structures that they had negotiated with GGP.
On August 26, 2009, the US Federal bank regulators released a notice of proposed rulemaking (NPR) that responds to recent changes in US accounting standards for securitizations (see our June 22, 2009, Client Update “Big Changes to Securitization Accounting”).
The Bank of England (BOE) on 30 July 2009 announced a securities purchase facility to be known as the Secured Commercial Paper Facility (SCPF) under which the BOE will stand ready to purchase secured commercial paper meeting certain eligibility requirements in the primary and secondary markets. The SCPF adds to existing BOE asset purchase facilities by
allowing for the purchase of asset-backed commercial paper (ABCP), but its relatively narrow eligibility criteria may limit its use.
On July 22, 2009, the Obama administration delivered proposed legislation to Congress that addresses several of the administration’s key policy objectives for the securitization markets. The proposed legislation is part of the follow-up on the administration’s June 17 report entitled “Financial Regulatory Reform: A New Foundation” (the “Report”). We summarize the proposed legislation below.
4 August 2009 – Mayer Brown, a leading global law firm, announced today that 178 of its lawyers are listed in the 2010 edition of “Best Lawyers in America.”
In July of 2009, the Securities and Exchange Commission proposed significant amendments to Rule 2a-7, the rule that regulates money market funds. Issued in response to the severe problems that money market funds have experienced since the fall of 2007, the proposed amendments affect many aspects of Rule 2a-7, including its requirements relating to portfolio quality, maturity, liquidity and diversification.
The Basel Committee on Banking Supervision has adopted amendments to the Basel II Capital Accord responding to the financial markets crisis. Among other things, the amendments impose substantially higher capital requirements on resecuritization exposures (like CDOs of ABS), whether held in the banking book or the trading book, and impose an incremental capital charge on securitization exposures held in the trading book.
The Obama administration has released extensive proposals to change the financial services regulatory regime in the United States. The proposals, embodied in a report entitled “Financial Regulatory Reform: A New Foundation” (the “Report”), call for the most significant overhaul of the American financial regulatory landscape since the Great Depression, and are intended to mitigate or forestall future financial crises.
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