February 22, 2019 | Issue 272
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ARRC Launches LIBOR Consumer Products Working Group; SFIG to Chair Sub-Group
The Alternative Reference Rates Committee (“ARRC”) has launched its fourth working group, the Consumer Products working group. Close to completing the best practice recommendations for floating rate notes, business loans, and securitizations, the ARRC is now turning its attention to consumer products. The ARRC is establishing the following sub-groups of the consumer products working group to help facilitate:
- Models for the overnight Secured Overnight Financing Rate (“SOFR”) – identify a model for using overnight SOFR in ARMs that is acceptable to consumers, lenders and investors, and servicers.
- Fallbacks – adapt fallback language from other cash products that would be appropriate for inclusion in a newly issued consumer product, and map out a suggested approach to fallback for legacy consumer products.
- Other Consumer Products – identify other consumer products that may reference LIBOR (student loans, reverse mortgages, and small business loans having already been identified); to the extent possible, measure the exposures of these products; and identify any issues involved in these products that the working group should consider.
- Consumer Outreach and Education – construct an actionable plan for consumer outreach and education, including identifying steps required for internal implementation within firms.
Sairah Burki, SFIG’s Head of ABS Policy, will chair the “Other Consumer Products” sub-group. Please email
Sairah Burki
if you are interested in joining this group.
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SFIG News Schedule Change
SFIG News will not be published on Friday, March 1. The newsletter will resume its normal publication schedule on Friday, March 8.
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States Agree to Sweeping Regulatory Reforms
Banking regulators across a number of states have agreed to 14 recommendations, developed by the fintech industry and shepherded by the Conference of State Bank Supervisors, aimed at streamlining state-by-state licensing and supervision processes. As described in
American Banker
, fintechs have long argued that the state-by-state licensing process is burdensome. The agreed-upon recommendations come at a time when Federal agencies are beginning to offer national bank chartering options for fintechs, underscoring the need for states to remain competitive.
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Fitch Ratings Expects Oil and Gas Companies to Tap Securitization Market
Asset Securitization Report
writes that Fitch Ratings has developed rating criteria for ABS backed by oil and gas royalties, as the rating agency expects oil and gas companies to utilize the securitization market for funding as early as 2019. The article notes that recent changes to the corporate tax rate, along with other factors, has made funding via securitization relatively more appealing than master limited partnerships, which have historically been used to raise funds in the oil and gas industry.
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Fed Unsure on Need for Rate Hikes in 2019
Federal Reserve officials widely favored ending the runoff of the central bank’s balance sheet this year while expressing uncertainty over whether they would raise interest rates again in 2019, according to minutes of the January Federal Open Market Committee meeting. As reported by
Bloomberg
, “Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year,” according to the FOMC’s January 29-30 meeting notes which were released Wednesday, February 20.
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Demand for Jumbo Lending Declined in Q4 2018
According to a report in
Inside Mortgage Finance
, non-agency jumbo originations weakened to $65 billion in the fourth quarter last year. Finishing on a down note, jumbo production for 2018 declined 12.2 percent to $281 billion. According to an accompanying loan officer survey from the Federal Reserve, 21 of 60 banks reported weaker demand for jumbo mortgages while only two reported stronger demand from the previous quarter.
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LIBOR Task Force Call
Wednesday, March 6
4:00 p.m. - 5:00 p.m. EDT
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Registration for SFIG Vegas 2019 Closes Today
Be sure to register for SFIG Vegas 2019 before 5:00 p.m. EDT. If you miss the registration deadline, you will have the opportunity to register onsite during the conference.
Click here
for details.
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Nominate a Speaker for SFIG Canada 2019
Speaker nominations are open for SFIG Canada 2019. The event will take place May 22-23 at the Fairmont Royal York Hotel in Toronto, Canada.
Click here
to view panel topics and to submit speaker nominations. Nominations close on Friday, March 8, at 5:00 p.m. EDT.
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