cars ii industry pushes through winds …las vegas monday, january 23, 2012 buyside presence a big...

Q&A With The ASFThe securitization industry has its work cut

out for it in 2012, with major Dodd-Frank rules set for implementation during the year and ongoing economic turbulence showing little signs of subsiding. Tom Deutsch, executive director of the American Securitization Forum, recently spoke with Securitization Intelligence about what’s in store for the industry this year, and whether the market will be able to grow despite the regulatory and economic headwinds.

SI: Does the move to Las Vegas signal a mood change in the securitization industry, despite the economic uncertainty of the last year?

DEUTSCH: We certainly expect there to be a mood lift from having everyone in same, first-class facility at the Aria as opposed to being spread throughout the city in a number of different hotels like we were in Orlando and Washington. This year, we have almost exclusive use of the Aria, which has over 4,000 hotel rooms and nearly twice as much one-on-one meeting space in the conference center than we

(Continued on page 26)

Las Vegas Monday, January 23, 2012www.ASF2012.com

Buyside Presence A Big Focus By Marissa Capodanno

All eyes are on the buyside as ASF2012 kicked off Sunday, with industry players hoping a

good turnout from investors will signal appetite for a forward calendar. An official at a financial advisory firm said in recent years -- for obvious reasons -- there has not been much to draw investors. “‘Where are all the investors?’ they’d ask me, and I’d say ‘Show me what you’re doing to earn them back, and I’ll show you the investors,’” the advisor said.

But with north of $4 billion in ABS alone hitting screens the week before the conference, and assurances from all sides that there’s more in the pipeline, bank officials expressed an optimistic outlook that investors are ready to get back in the game. “What we’re seeing in the market is that investors are fully engaged—investors are certainly looking to add assets to their portfolios,” said Michael Millette, head of structured finance at Goldman Sachs. “We’re not just seeing volumes, but also a breadth of order book that is really distinctive versus what we saw in the fourth

Industry Pushes Through Winds To VegasBy Graham Bippart and Marissa Capodanno

Snow in the Northeast and unusually heavy winds in Las Vegas did not affect the first day turnout at the American Securitization Forum’s 2012 conference at the Aria Resort and Casino. Attendance hit

the high end of expectations and the mood was all about getting back to business and moving forward, attendees said. Many noted that they had completely booked themselves with client meetings. “It’s a much more business-oriented atmosphere than the last time the conference was held in Vegas,” said John Hwang, attorney at Allen & Overy.

It seems clear everyone is well aware of the hurdles that remain, as securitization professionals grapple with the market impact of global economic issues and another year’s worth of regulatory


CARS II

Auto ABS Still Driving The Market

Wrestling With The Volcker Rule 10

Hazy Forecast For Structured Finance 18-20

Subprime Auto Chugging Along 20-24

INSIDE

p8HOLDING STEADY

Securitization Is Holding Its Ground In Europe

p11THE YEAR IN REVIEW

Agenda 4

Hotel Map 6

Exhibit Hall Map 24

WHAT’S UP? WHERE AM I?

Tracing The 2011 Timeline

p14-15


Congressman Ed Royce (R-CA) during the featured address Sunday night.

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ASF Daily Monday, January 23, 2012

www.ASF2012.com www.securitizationintelligence.com 3

Welcome to ASF 2012, the largest gathering of capital markets professionals in the world. This year’s event, held at the spacious ARIA Hotel & Convention Center, promises to be a highly productive and valuable

meeting, bringing together approximately 4500 industry participants, policymakers and academics to provide unparalleled

opportunities for business networking, face-to-face meetings, and timely discussions of critical market and policy issues.

We are in the midst of an unprecedented wave of rulemaking that will have a substantial impact on our industry

and the securitization business model for years to come. ASF members, staff and counsel have dedicated thousands

of hours to providing industry input on every relevant rulemaking publicly issued. Our various Committees and

Subforums have collaborated to produce thousands of pages of deliberative comments to regulators and legislators

on everything from risk retention and the qualified residential mortgage (QRM) provisions to the Regulation AB II re-

proposals, from the bank regulators’ Volcker Rule proposals to federal legislation that would overhaul the mortgage

capital market. ASF members and staff have also tirelessly worked on invaluable market practice initiatives, such

as the Project RESTART Model RMBS Repurchase Principles and the ASF Rule 15Ga-1 Market Implementation Guide,

that help foster standard implementation across the industry. Although we expect to continue a torrid pace of

rulemaking responses into 2012, ASF market implementation efforts of final rules will become even more salient as

market participants begin compliance efforts with the myriad of new rules.

The ASF 2012 agenda highlights many of the implications of the new regulatory and legislative initiatives and evolving

business practices that will continue to shape the face of the industry. The agenda has been designed to include a wide

range of panels, covering themes that appeal to the broad range of firms and professionals involved in today’s structured

finance market. ASF 2012 speakers include key policymakers and thought leaders who are integrally involved in shaping

the future of securitization, as well as business leaders from across the industry who will offer expert perspective and

insight into current developments and their outlooks for 2012 and beyond.

The program provides advanced insight and analysis into virtually all major regulatory and policy events as they

affect every corner of the industry. ASF 2012 presents substantive sessions on current and upcoming policy reform

initiatives, including Dodd-Frank rulemakings and risk-based capital regulations, as well as sessions discussing the

consumer economy, the future of mortgage finance and the capital markets, GSE reform, the European sovereign

debt crisis, and coverage of securitization asset classes and product types, including auto ABS, credit card ABS,

student loan ABS, equipment ABS, renewable energy ABS, RMBS, CMBS, covered bonds, ABCP, derivatives, and

international and re-emerging securitization sectors. Although appreciably smaller than when at their peak, our

markets still touch nearly every corner of the credit markets throughout the globe.

Finally, I’d like to personally thank the ASF 2012 supporters for continuing to make this conference an enormous

success. Your continued dedication to ASF ensures that this conference remains by and for the securitization

industry.

Sincerely,

Tom Deutsch

Executive Director

American Securitization Forum, Inc.


4 www.securitizationintelligence.com www.ASF2012.com

Agenda

7:00 AM – 7:30 PM REGISTRATION

7:00 AM – 8:30 AM BREAKFAST

7:00 AM – 7:30 PM EXHIBIT HALL

Bristlecone Ballroom

8:00 AM – 8:20 AM Welcome and Chair’s Address

Pinyon Ballrooms 4 & 5

Ralph Daloisio, Managing Director, Natixis

Tom Deutsch, Executive Director, American Securitization Forum, Inc.

8:20 AM – 9:20 AM GENERAL SESSION 2012 Securitization Market Outlook


A look at the year ahead for the securitization market.

MODERATOR Douglas Murray, Group Managing Director, Fitch Ratings

9:20 AM – 10:20 AM GENERAL SESSION Implications of European Sovereign Debt Crisis on Securitization


A discussion of the implications of the European sovereign debt crisis on securitization markets.

MODERATOR Lewis Cohen, Partner, Clifford Chance US LLP

10:20 AM – 10:45 AM BREAK


10:45 AM – 11:45 AM GENERAL SESSION Global Securitization Policy Reforms Pinyon

Ballrooms 4 & 5

An overview of recent global policy reforms aimed at securitization and their implications for the markets in 2012 and beyond.

MODERATOR Cameron Cowan, Partner, King & Spalding LLP

11:45 AM – 12:45 PM GENERAL SESSION Future of U.S. Mortgage Finance


An overview of current and possible changes to the United States mortgage finance market.

MODERATOR Andrew Davidson, President, Andrew Davidson & Co., Inc.

12:45 PM – 2:00 PM LUNCH


2:00 PM – 3:00 PM CONCURRENT BREAKOUT SESSIONS Mortgage Underwriting and the Impact of QM


A look at mortgage underwriting and the impact of the proposed qualified mortgage definition.

MODERATOR Howard Kaplan, Partner, Deloitte & Touche LLP

The Volcker Rule & Conflicts of Interest


A discussion of Dodd-Frank Sections 619, 620 and 621 and their implications on structuring and issuing asset-backed securities.

MODERATOR Evan Siegert, Managing Director, Senior Counsel, American Securitization Forum, Inc.

Auto Loan and Lease ABS Sector Review

Pinyon Ballroom 3

A review of current issues and challenges facing the auto ABS market.

MODERATOR Stuart Litwin, Partner & Co-Head, Securitization, Mayer Brown LLP

Covered Bonds Sector Review

Pinyon Ballroom 8

An overview of current trends in the covered bonds market in United States and abroad.

MODERATOR Ben Colice, Director, RBC Capital Markets

3:05 PM – 4:05 PM CONCURRENT BREAKOUT SESSIONS RMBS RESTART


A look at the prospects for and impediments to the next iteration of RMBS transactions.

MODERATOR Eric Kaplan, Managing Director, Shellpoint Partners LLC

ABS Collateral Information – Current Practices and Policy Reforms


A look at recent regulatory proposals concerning

disclosure and the industry’s response.

MODERATOR John Keiserman, Partner, Katten Muchin Rosenman LLP

Student Loan ABS Sector Review

Pinyon Ballroom 3

A discussion of the student loan ABS market and the potential impacts of regulatory reform.

MODERATOR Barbara Thomas, Managing Director, Morgan Stanley

ABCP Sector Review

Pinyon Ballroom 8

A discussion of the current and future asset-backed commercial paper market.

MODERATOR Philip Galgano, Managing Director, Standard & Poor’s

4:05 PM – 4:30 PM BREAK

4:30 PM – 5:30 PM CONCURRENT BREAKOUT SESSIONS RMBS Servicing – Economics and Regulatory Reform


A look at the current trends for RMBS servicing and the potential impact of regulatory reform.

MODERATOR Scott Samlin, Partner, SNR Denton US LLP

Risk-Based Capital Regulatory Developments


An overview of evolving risk-based capital requirements.

MODERATOR Scott Stengel, Partner, King & Spalding LLP

Credit Card ABS Sector Review

Pinyon Ballroom 3

A review of current issues and challenges facing the credit card ABS market.

MODERATOR Ellen Marks, Partner, Latham & Watkins LLP

CLO Sector Review

Pinyon Ballroom 8

A look at regulatory challenges facing the CLO market and the outlook for 2012.

MODERATOR Sara Bonesteel, Managing Director, Head of Alternative Investments, Prudential Fixed Income

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Convention Center Map

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BRISTLECONE BALLROOMExhibit HallInformation Desk . . . . . . . . . . 1B

BLUETHORN MEETING ROOMSASF Meeting Room . . . . . . . . . 1Speaker Ready Room . . . . . . . . 2 BMO Capital Markets . . . . . . . . 3, 4 & 5Bingham McCutchen LLP . . . . . 6 & 7Société Générale Corporate . . . . 8& Investment Banking Standard & Poor’s . . . . . . . . . 9 Nomura . . . . . . . . . . . . . . . 10 & 11

COPPERLEAF MEETING ROOMSCoreLogic . . . . . . . . . . . . . . 1BNY Mellon . . . . . . . . . . . . . 2Information Desk . . . . . . . . . . 2BFitch Ratings . . . . . . . . . . . . 3Crédit Agricole . . . . . . . . . . . 4 Corporate and Investment Bank Jefferies & Company, Inc. . . . . . 5 & 2AU.S. Bank National Association . . 6SNR Denton . . . . . . . . . . . . . 7Amherst . . . . . . . . . . . . . . . 8 & 9DBRS . . . . . . . . . . . . . . . . . 10Moody’s . . . . . . . . . . . . . . . 11 & 12

IRONWOOD BALLROOMSJ.P. Morgan . . . . . . . . . . . . . 1 & 4The Royal Bank of Scotland . . . . 2, 3 & 3ADeutsche Bank . . . . . . . . . . . 5Intex . . . . . . . . . . . . . . . . . 6ARaymond James . . . . . . . . . . 6B & 6CKroll Bond Ratings . . . . . . . . . 6D1010data . . . . . . . . . . . . . . 6ESandler O'Neill & Partners, L.P. . . 6FEquifax . . . . . . . . . . . . . . . 6G Clayton Holdings LLC . . . . . . . 6HCredit Suisse . . . . . . . . . . . . . 7 & 8

JUNIPER BALLROOMSBank of America Merrill Lynch . . . 1 & 3BRBC Capital Markets . . . . . . . . 2Wells Fargo . . . . . . . . . . . . . 3Barclays Capital . . . . . . . . . . 4

STARVINE MEETING ROOMSUBS . . . . . . . . . . . . . . . . . 1 & 2Citi . . . . . . . . . . . . . . . . . . 3, 4 & 5 HSBC . . . . . . . . . . . . . . . . . 6PricewaterhouseCoopers – PwC . . 7Goldman Sachs . . . . . . . . . . . 8 & 9Morgan Stanley . . . . . . . . . . . 10 & 11Cadwalader, Wickersham & Taft LLP . . . . . . . . . . . . . . 12BNP Paribas . . . . . . . . . . . . . 13ASF Meeting Room 2 . . . . . . . . SENNA BOARDROOM

Securitization Intelligence . . . . . COTTONWOODMOORDRAOB

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REGISTRATION

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ASF2012-Monday.indd 6ASF2012-Monday.indd 6 1/19/12 5:11 PM1/19/12 5:11 PM

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Auto ABS

This could also be the year for auto lease and floorplan-backed deals to shine. Eric Gebhard, v.p. and treasurer at World Omni Finance Corp., said his firm is planning to bring two auto loan and one auto lease transaction to the securitization market this year. He said World Omni, the Deerfield Beach, Fla.-based captive auto finance company of Toyota in the Southeastern U.S., is a frequent auto lease ABS issuer, and that he was encouraged to see an uptick in that sector in 2011. “A number of issuers of lease ABS came to market in 2011 – Hyundai, Mercedes, Porsche – and it’s good to see that market get more activity,” Gebhard said.

Gebhard added he expects the trend of newer and less-frequent auto lease issuers tapping the securitization market to continue, since the investor pool is deepening as well. “It’s our view that the rating agencies have driven deals to more conservative structures, and those structures are very resilient,” he said. “Investors are realizing it’s an opportunity to pick up some yield without the incremental risk. The new issuers in 2011 broadened the lease ABS market.”

Credit Suisse’s Zucconi said floorplan-backed deals were another part of the auto sector that the market should keep an eye on in the coming year. “Floorplan is a spread relative-value story for 2012,” Zucconi said. “Increased [Original Equipment Manufacturer] profitability, increasing new vehicle sales and careful inventory management has led to increasing dealer profitability.” He explained that floorplan was the type of auto ABS most closely tied to the fundamentals of the manufacturer and

dealerships, adding that while floorplan had historically priced wider than loan and lease, these improving fundamentals mean floorplan will be a good relative value buy.

The positive macroeconomic conditions that helped auto ABS make a strong showing in 2011 also look to be on track to continue in 2012. The auto ABS sector got a boost in the second half of 2011 as the ongoing sovereign debt woes in the Eurozone sparked a market-

wide “flight to safety.” In September, JPMorgan’s auto team touted the Toyota 2011-2 notes as the first deal able to price at 2007 level tights since the credit crisis, citing the Eurozone volatility as driving borrowers into the deal’s money market tranches. The senior tranches of the Toyota 2011-2 transaction priced at nine basis points over the Eurodollar Synthetic Forward benchmark. If investors see the Eurozone continuing to work through its issues and seek solutions, and if the U.S. continues to be viewed as a safe haven for global investors seeking to avoid Euro volatility, Zucconi said he expects the boost in auto to continue.

The strong bid for auto paper in the second half of 2011 was most clearly seen in the top of the credit curve, he said, but added he thinks the same strong bid will make its way out into subordinated tranches of auto-backed bonds in 2012. “We’ve seen deals coming out this week with front-end tranches subscribed as much as seven times,” Zucconi told SI on Jan. 12. “While demand continues to be more concentrated at the front-end,

we’ve seen healthy interest out the curve return as well.”

So far, the biggest difference in the crop of primary issuance transactions seen in 2012 has been the new mandatory compliance with the Securities and Exchange Commission’s Rule 193. The rule is a part of Dodd-Frank regulatory reform, and was finalized in the New Year. It requires a depositor review of the receivables pool—or an overall accuracy check on the underlying loans performed by the issuer—to be included in offering prospectuses. Stuart Litwin, partner at Mayer Brown, said that while the rule was an added step to the deal process and took some additional time to comply with, he thought that once issuers became used to the rule, they would not find it too onerous. “It’s not a significant drag on the market

and it’s not stopping anybody from doing a transaction,” Litwin noted.

Zucconi said Dodd-Frank and other wide-ranging financial regulatory reforms should not be a game changer for auto ABS. “Our market has been fairly resilient to the various provisions coming out of Dodd-Frank and other pieces of legislation,” he said. There was concern that the SEC’s Rule 193 would be a small damper on the market, especially for issuers without

a deep bench. But auto deals have complied fairly easily so far in 2012. “We’re working with external counsel to get fully up to speed,” Gebhard said. “As any issuer will tell you, it feels like it’s more paperwork than is creating value for the investor,” he noted. But he said he did not think the rule would not be putting the brakes on any new deals.

Cars II

Auto ABS Dominance Tipped Again In 2012By Amelia Granger

Auto asset-backed securities were hailed as a bright spot within the sometimes grim securitized

products market of 2011. Auto loan, lease and floorplan-backed bonds made up 50-60% of

U.S. ABS issuance last year. Jon-Claude Zucconi, managing director at Credit Suisse, says it looks

to be the same story again in 2012, with auto zooming far ahead of the pack, dodging the regulatory

changes and slow collateral origination rates that are proving to be roadblocks in other types of

securitized products. Market pundits are pointing to metrics measuring collateral performance and

origination that predict an increase of as much as 10-15% year-over-year in auto ABS volume.

Eric Gebhard

Stuart Litwin


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Regulation

Unlike some other regulations, which have do not have a defined implementation date, the Volcker Rule is specifically required within the Dodd-Frank Act to be put into place two years after President Barack Obama signed the Act into law in 2010. That has the rule slated to come into effect July 21, 2012. “That gives the Volcker Rule a sense of urgency,” Timothy Mohan, chief executive partner of Chapman & Cutler, told SI. Industry experts are still scrambling to come to grips with its real implications across the structured products market.

After the implementation date, there will be a two-year period for banks to get into compliance with the new rule. Williams said that period opens up more questions about the ways in which the Volcker Rule will really play out. Some banks might choose to exit certain markets or certain types of structures quickly, while others might take more time, making for major market shocks. “The statute says banks should come into compliance with the Volcker Rule ‘as soon as practicable’ – but is that six weeks? Six months? A year? That adds to the level of uncertainty,” Williams said.

The Volcker Rule is in the process of being jointly drafted and enacted by the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the SEC and the Commodities Futures Trading Commission. Comments on those agencies’ proposal were originally due Jan. 13, 2012, but that deadline has been pushed back by one month to give the industry more time to continue to draft constructive comment letters and feedback on exemptions and other facets of the rule, said Mohan. He is in the process of drafting the American Securitization Forum’s comment letter on

the Volcker Rule. Apart from the issue of overlap between

the Volcker Rule and other various regulatory measures, Mohan said there is a concern that securitization vehicles involving banks advancing credit to transaction parties, such as an asset-backed commercial paper conduit or an residential mortgage-backed securities offering that includes a servicing advance feature, may be swept up in the new restrictions. The 23a Provision in the existing Federal Reserve Investment Act of 1940 prevents banks from entering into certain types of transactions with non-bank affiliates. The Volcker Rule creates the so-called Super 23a, Mohan said, which extends the scope of those restrictions in a way that defines “covered funds,” including ABCP conduits and others, as affiliates, restricting the ability of a bank to extend any kind of liquidity facility to them. “If the rule goes forward as proposed, people will need to rethink those structures,” he noted.

ABCP conduits, one of the structures threatened by the Volcker Rule, have already been endangered by other regulatory measures, such as the new liquidity requirements and capitalization ratios included in Basel III provisions. But another market facing a new and potentially serious threat from the Volcker Rule is the agency RMBS market.

Williams said RMBS issued by the government-sponsored enterprises could potentially take a serious blow. While agency debt is specifically excluded from the rule, there is no clarity on how far that exclusion goes. It doesn’t mention agency MBS, agency collateralized loan obligations or agency collateralized debt obligations, or the vast derivatives market based on almost entirely on

agency debt, such as swaptions, Williams noted. If the rule did sweep up agency RMBS into

its purview, it might be hard for banks to make a market in the debt, as that activity would resemble the kind of proprietary trading the rule is designed to eliminate. If banks then were forced to exit the roughly $5 trillion agency MBS market, or at least dial back their activities, the market would be without dealers, leaving the government struggling to sell its product. This would likely lead to additional GSE losses and another major hit on the already beleaguered mortgage finance market.

“Should the Volcker Rule apply to agency MBS, it’s hard to imagine there would be a free-flowing agency MBS market,” said Williams. “If they don’t exclude it, it’s not necessarily cost-free for the agencies,” he added.

The Volcker Rule, named after its chief architect, former Federal Reserve Chairman Paul Volcker, was originally created to limit prop trading. But after the investigation of Goldman Sachs’ Abacus CDO in April 2010, and the subsequent Congressional hearings, Senators Jeff Merkley (D-Ore.) and Carl Levin (D-Mich.) tacked on to the Volcker Rule provisions to ban so-called “conflict of interest trading.”

Williams said he was confused by the regulators’ decision to build out the Volcker Rule, when separate conflict of interest provisions are due out from a host of regulators. Also, the risk retention rule is being crafted to specifically address banks’ and other issuers’ potential conflicts of interest in issuing risky transactions into the market and offer protection to investors. “That’s what we don’t understand,” he said. “How is it that these things don’t work together?”

What Does It All Mean?

Volcker Rule’s Hit On Securitization Still MurkyBy Amelia Granger

The Volcker Rule’s enforcement date is a mere six months away, but industry professionals say

they still aren’t sure what the complex and overarching rule really means for securitization.

“The broad sweep of the Volcker Rule seems to have inherent conflicts with other provisions

of Dodd-Frank,” said Michael Williams, managing director and co-head of public policy for the

Americas at Credit Suisse, mentioning the Securities and Exchange Commission has its own

version of a conflict of interest provision, which is similar to portions of the Volcker Rule. “Are they

related, or are they different solar systems? We don’t really know how they interact.”


ASF Daily Monday, January 23, 2012 International

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mortgage-backed securities since

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in the formation of the MBS and

CMBS markets.

More than 50 lawyers from Thacher

Proffitt’s Structured Finance Group joined

Sonnenschein’s Capital Markets practice

in 2009, providing a national platform

from which to serve their clients.

Sonnenschein combined with Denton Wilde Sapte to

form SNR Denton in 2010. The firm’s Capital Markets

practice continues to serve the structured finance

needs of former Thacher Proffitt and Sonnenschein

clients—and now many others around the world.

1982 2009 2010

snrdenton.com

European asset-backed and mortgage-backed securities continued to be placed into the market over the past year despite twin challenges of sustained market turbulence and tighter regulatory restrictions. Market participants have highlighted the latest draft of the EU’s Solvency II regulations, which place even tougher capital charges on insurance and pension fund investors’ holdings of ABS companies, potentially driving them out of the already-depleted European securitization investor base.

Estimates of total European issuance volume for 2011 vary, but the number of deals placed

with investors is reckoned to be near the EUR80 billion ($104.5 billion) level. And while there has been disappointment that volumes did not reach the levels hoped for during the first half of the year, the number of deals getting away has been impressive, according to Mark Hale, chief investment officer at Prytania Investment Advisors.

Recent Citigroup research pointed to securitization becoming an increasingly larger part of European banks’ funding arsenal during

2011. Placed securitization surged from 2% of the region’s bank capital market funding, which also includes covered bonds and senior unsecured bank debt, in January last year, to 29% by October and November.

On the flipside, the continuing sovereign debt crisis gripping the euro zone saw a number of residential mortgage- and asset-backed securities deals being put on ice during the second

half of the year.Yet despite pressures, core markets such as

Securitization Hanging Tough In Europe By Hugh Leask

Europe’s securitization market has continued to show resilience throughout the sustained turmoil

sweeping credit markets since last year, remaining a key part of the overall funding arsenal for

firms in the region. And with bank lenders still absent from Europe’s commercial property finance

sector, some London-based officials say this could reopen a spot for commercial mortgage-backed

securities, though most remain cool on the prospect of a steady flow of new deals.

Mark Hale




International

U.K. and Dutch RMBS and German autos stayed resilient. In the U.K., Skipton Building Society priced its debut RMBS Darrowby at 150 basis points in March, while other first-time entrants to the market included Yorkshire Building Society with its Brass trade in May and Principality Building Society with the Friar No. 1 RMBS in August. Meanwhile, prolific pre-crash securitizers Northern Rock and Paragon Mortgages also made RMBS market comebacks. Sizeable dollar-denominated tranches of U.K. deals in particular have become a mainstay of the market, with issuers keen to tap U.S. investors’ appetite for attractive yields found across the Atlantic.

In June, Deutsche Bank rolled out the £302.34 million ($469.1 million) DECO 2011-CSPK, which securitized a single loan on a business park in Chiswick, west London. It was hoped the deal would signify a thawing out of the frozen European CMBS mart, yet the deal remains the only new issue post-crisis CMBS in the region to date, despite rumours of multi-loan deals during the fall.

“Realistically, with all the negatives around, the fact we saw as much new issuance and from as diverse a section of issuers as we did, including some new names coming to the market, it’s been very impressive,” Hale told SI. “The fact ABS has

remained open throughout extreme stress, price volatility, problems in equities and debt markets further illustrates why we believe the virtues of relative stability and relative access remain a powerful and ongoing argument for securitization.”

In CMBS, with fewer banks returning to commercial real estate funding, lending margins have increased, with those banks that remain in the market having a more expensive funding base, according to Caroline Philips, managing director and head of European structured debt at Eurohypo. Philips said if loan margins continue to rise, parity between lending margins and CMBS

spreads will be reached. “At some point they will hit a level where CMBS becomes economically viable again,” Philips told SI.

“It’s tough to say where margins are given there are low volumes of deals, but a prime senior loan that a few months ago would have priced at 225 bps is now at the 275 or 300 level. It’s a generalization, but that’s broadly where it is,” Philips explained. She noted that for non-prime real estate assets there are

even fewer deals happening. “Were there deals being done, the margins would be even higher.”

Deutsche Bank is already said to be preparing a new £210 million ($325.9 million) U.K. CMBS backed by a single loan on the Westfield Merry Hill shopping mall near Birmingham. That deal is

one of two new issues reckoned to be in the works for the first quarter of the year, with industry lawyers recently forecasting a “slow steady drip feed” of new deals in 2012.

But Philips urged caution on any prospect of a steady flow of new deals. “It will be quiet,” she said. “Most people are focused on restructurings on existing securitized deals. What liquidity there is in the bank market is focused on the prime-prime end, which of course is where investors would like to do CMBS.”

Christian Aufsatz, asset-securities analyst at Barclays Capital in London, said the prospect for new trades hinges in part on the health of commercial real estate. “I don’t think we will see a flurry of CMBS issuance in 2012,” Aufsatz told SI. “The outlook for the property market is not good.”

“Securitization is not treated well under regulation—for many investors it’s either prohibitive to buy securitization or simply the capital charges are too high. Most of the regulations promote buying loan portfolios or buying covered bonds,” Aufsatz said of regulatory hurdles confronting the CMBS market.

He noted investors prefer to have direct control over loans and potential future workouts, as opposed to CMBS where investors only have indirect control. “If an investor wanted to take on commercial real estate exposure, most of them would prefer to either buy whole loans or originate loans.”

Caroline Philips

2011 Top 10 European ABS DealsDeal Pricing Date Deal Total Face Value ($ millions) Issuer Issuer Parent

4/21/11 2,102 Motor Finance 2011-1 Banco Santander SA

7/21/11 2,034 SANDOWN GOLD 2011-1 plc Lloyds Banking Group plc

3/8/11 1,918 Bilkreditt 1 Ltd Banco Santander SA

9/22/11 1,773 Gracechurch Card Programme Funding plc (Series 2011-4) Barclays plc

7/5/11 1,525 AUTO ABS FCT Compartiment 2011-1 PSA Peugeot Citroen

2/7/11 1,475 Gracechurch Card Programme Funding plc (Series 2011-1) Barclays plc

3/31/11 1,340 Volkswagen Car Lease (VCL) No 13 SA Porsche Automobil Holding SE

11/24/11 1,261 Cars Alliance Auto Loans Germany 2011-1 Renault SA

3/23/11 1,245 Bumper 2 - 2011 LeasePlan Corp NV

10/20/11 1,188 FCT Ginkgo Compartment Sales Finance 2011-1 Crédit Agricole SA

2011 Top 10 European MBS Deals Deal Pricing Date Deal Total Face Value ($ millions) Issuer Issuer Parent

10/13/11 19,957 Silverstone Master Issuer plc Series 2011-1 Nationwide Building Society

4/8/11 7,419 Arran Residential Mortgages Funding 2011-1 plc Royal Bank of Scotland Group plc

5/18/11 6,085 Fosse Master Issuer plc Series 2011-1 Banco Santander SA

4/14/11 5,982 Permanent Master Issuer plc 2011 - 1 Lloyds Banking Group plc

10/10/11 5,507 Arran Residential Mortgages Funding 2011-2 plc Royal Bank of Scotland Group plc

11/10/11 4,962 Gracechurch Mortgage Financing plc 2011-1 Barclays plc

10/26/11 4,919 Permanent Master Issuer plc 2011-2 Lloyds Banking Group plc

7/21/11 3,924 Arkle Master Issuer plc 2011-1 Lloyds Banking Group plc

9/14/11 3,784 Holmes Master Issuer plc Series 2011-3 Banco Santander SA

2/2/11 3,304 Holmes Master Issuer Plc Series 2011-1 Banco Santander SASource: Dealogic


Securitization has served a central role in the global credit markets over the

last 25 years. Assets such as mortgages, auto loans, credit cards and student loans have all been regularly funded through the issuance of asset-backed securities (ABS). Such fi nancings have enabled borrowers to access credit, often times at lower costs than traditional alternatives. As securitization professionals, we are acutely aware of the impact the credit crisis, toxic assets and weak corresponding ABS structures had on our industry. These weaker “legacy deals” continue to wind-down with many having already been fl ushed through the system. Today, there is a renewed focus on fi nancing higher credit quality assets, increased transparency and an improved alignment of interests between underwriters, issuers and investors. Together, these factors should result in a healthier market going forward, albeit on a smaller scale than the 2007 pre-crisis levels.

Reestablishing confi dence in our product has been critical in kick starting the economy and fi nancing growth. Beginning with the success of the Federal Reserve’s Term Asset-Backed Loan Facility, the overall securitization market has recovered nicely since the credit crisis. Future securitization volumes, however, are tied to overall economic growth (or lack thereof), as well as macro economic issues and regulatory reform. With the European debt crisis issues, the continuing impact of the U.S. debt downgrade and ongoing fi scal negotiations, and potential for slower-than-anticipated

growth in the U.S. and abroad, uncertainty around deal fl ow and pricing is expected to continue. Notwithstanding the increased volatility, ABS deals continue to occur. According to Bloomberg, 2011YE ABS supply stands at $158 billion compared to $127 billion for 2010. In ABS, auto loans have been the dominant sector, as investors like the short-term nature and relative low risk of the underlying assets. Investor appetites have returned for more traditional asset classes and some esoteric assets have been receiving interest from investors willing to look at off-the-run assets in search of yield. AAA U.S. ABS spreads remain relatively steady for now but are at risk of more substantial widening if global economic conditions worsen further.

U.S. asset-backed commercial paper (ABCP) remains a core product offering for many large, multi-national banks despite regulatory and accounting headwinds. ABCP issuer clients value the diversifi cation ABCP provides to their funding mix and its overall fl exibility. Some banks have exited the conduit market or experienced funding pressures resulting in wider spreads. In some cases, issuers have looked to replace these fi nancings with more stable sources of capital to

dampen the impact of wider funding levels.

There is no denying that it’s easier for consumers to obtain capital today than it was two years ago. In part, this can be attributed to the re-emergence of the securitization market. For instance, lenders are starting to make more auto loans, and to consumers with credit blemishes in particular. According to its quarterly automotive credit analysis, Experian notes that 21.87% of all new vehicle loans were made to subprime borrowers. Not coincidently, 2011YE subprime auto ABS

issuance reached $12.4 billion according to Bloomberg, up 43.9% from $8.6 billion for the same period last year.

While securitization has already helped revitalize parts of the consumer lending sector, it will likely play a key role in helping restart the U.S. housing fi nance market. While it is uncertain what the role of government-sponsored enterprises (GSE) will be in the future, it is reasonable to suggest that GSEs will have reduced involvement. This could create a fi nancing void in the market that traditional lenders will be unable to fi ll on their own. Residential mortgage-backed securities (RMBS) are a potential candidate to fi ll this void to the extent that all market players can chart a new path for successful issuance. This is no easy task given that volatility and uncertainty in the U.S. housing market remain near all-time highs. However, today’s mortgage problems and possible solutions offer yet another example of how securitization will likely be critical in restarting another vital segment of our economy.

How Securitization Can Help Revitalize the Economy

SPONSORED ARTICLE

MATTHEW PETERS

Managing Director, U.S. Securitization BMO

Capital Markets

BMO article.indd 1BMO article.indd 1 1/11/12 10:22 AM1/11/12 10:22 AM



Timeline

The Year In ReviewThe year since the American Securitization Forum’s last annual conference was a bumpy one for the industry, which managed to make significant forward steps despite a range of setbacks. The focus in many sectors moved out to broader global issues. The natural disaster in Japan, the uprising in the Middle East, the downgrade of U.S. debt by Standard & Poor’s and the increasing gloom over Europe’s economic stability dulled much of the year’s earlier optimism and turned the heat up on markets already bubbling with uncertainty. Capital markets volatility caused some shops, including Credit Suisse’s commercial mortgage-backed securities group and UBS’ consumer asset-backed securitization group, to close their doors. Market players became nostalgic for a time when they didn’t have to judge the tone of the day’s headlines in order to stay abreast of sharp market moves.

But the industry did make gains, with types of deals not seen since the market took a dive in 2008 beginning to trickle back. The first post-crash whole business securitization was unveiled early in the year. The collateralized loan obligation market began to see familiar faces return with new issuance. CMBS saw the return of publicly registered bond classes, inviting a broader base of investors and encouraging new bursts of spread tightening in the sector. Here’s a look at some of the other big events of the last 12 months.

January 18The Royal Bank of Canada beefs up its asset-backed securities team, with RBC officials saying they aim to build on past successes in leading student loan transactions. RBC scoops three structurers from Barclays Capital as part of the effort.

January 28New regulations hit hard in the new year, as credit rating agencies grapple with “expert liability” status. Securitization bankers see deals’ launch dates pushed back by as much as two weeks.

March 25Japan’s devastating earthquake and tsunami take their toll on the collateralized loan obligation market, with primary deals in the U.S. on hold as issuers wait for Japanese investors to regain their footing and return to the market.

February 4The first U.S. whole business securitization since the financial crisis of 2008, Barclays Capital’s Cajun Global Series 2011-1, hits the market. The $245 million offering is backed by cash flows from the parent company of fast-food chains Church’s Chicken and Texas Chicken.

February 11The Department of the Treasury releases its long-awaited white paper on the fate of the government-sponsored enterprises. The paper’s goal of shrinking the GSEs’ footprint in the near-term has the market nervous.

May 26UBS weighs ditching Stamford, Conn., for New York City. The bank was shopping for a new location for its headquarters in Midtown, but ultimately scuttled the plan to relocate en masse.

May 10The market discovers American International Group is by far the biggest buyer in the Federal Reserve Bank of New York’s Maiden Lane II auctions , leaving many scratching their heads . AIG is said to be snapping up as m uch as 50% of the portfolio, made up of its own dented legacy collateral.

April 19Pricing on new-issue collateralized loan obligation AAA notes tracks in to lev els not seen since the financial crisis of 2008, with new deals shopping AAAs at 125 basis points over LIBOR. Traders attribute the surge in demand to a br oad array of buyers re-entering the market.

April 6BlackRock completes its first auction of the Federal Reserve Bank of New York’s Maiden Lane II portfolio, offloading approximately $30 billion in legacy American International Group paper.




Timeline

June 7Suddenly all eyes are on Mortgage Electronic Registration Systems (MERS) when an Eastern New York court decision finds the transfer of a mortgage within a residential mortgage-backed securitization illegal. Foreclosure timelines are tipped to slow, and market players say they may have to rethink MERS and the mortgage transfer process.

June 9Barclays Capital floats the final resecuritization of National Credit Union Administration legacy collateral, hitting record tights in pricing on the final deal. It marks the 13th transaction in the NCUA program, which kicked off Oct. 18, 2010, and contained about $29 billion in paper.

June 28Standard & Poor’s informs Goldman Sachs and Citibank it cannot rate their joint commercial mortgage-backed securities deal, forcing the banks to pull the $1.5 billion transaction from the market on the eve of its planned settlement date. The CMBS met strong investor demand, however, when it relaunched in mid-September.

June 21The market starts sweating Congress’ stalemate over the debt ceiling, and trading zigzags. U.S. investors fear a selloff from overseas, especially in the agency residential mortgage-backed sector.

October 24The Federal Housing Finance Agency reveals long-awaited changes to the Home Affordable Refinance Program. The changes should help servicers get on board with refinancing, shaking up prepayments on residential mortgage-backed securities.

November 21Guggenheim Partners closes a $1.04 billion collateralized loan obligation, tipped to be the largest arbitrage CLO created since the market’s inception.

December 14UBS and Citigroup see strong demand for their $673.9 million commercial mortgage-backed securities deal, with the top of the capital stack coming in at the tightest levels seen since early summer.

September 21The U.S. Federal Reserve’s Operation Twist has a surprise ‘twist’ for securitization. Fed Chairman Ben Bernanke shocks the market with the news the Fed will reinvest paydowns on its residential mortgage-backed securities portfolio back into mortgage bonds.

September 14Power utility Entergy Louisana’s stranded asset securitization hits screens, marking the first deal of its kind ever to come to the U.S. market. The $270 million of fering is designed to defray costs of a failed venture by Entergy, and is backed by a line-item cost on its customers’ utility bills.

Redwood Trust launches a third publicly offered residential mortgage-backed securities deal. The $357.2 million 2011-2 notes are Redwood’s third RMBS since the 2008 financial crisis .

August 23Springleaf Financial begins to market its first subprime residential mortgage-backed securities deal. The $432 million transaction saw a good reception and has the real estate investment trust eyeing more issuance.

August 5Standard & Poor’s downgrades the credit rating of the U.S. federal government. Broader markets rode out historic volatility on the news, with equities making a record-breaking crash. While the rocky environment slowed asset-backed securities issuance, levels in government guaranteed residential mortgage-backed securities trading saw a strong bid.

June 29Bank of America-Merrill Lynch makes public an $8.5 billion settlement with a band of investors seeking putbacks in soured Countrywide Financial residential mortgage-backed securities. BAML and Countrywide bonds see an initial jump in trading, however, the legal battle is far from over.




Market View

Th e core consumer ABS sectors—credit cards and autos in particular—are expected to again demonstrate strong performance and rating stability with private student loans remaining the potential outlier. CLOs are also expected to continue their solid performance barring a signifi cant setback to the US economy.

In the mortgage world, CMBS performance metrics have stabilized but the sector is not completely in the clear. On the other hand, residential mortgage-backed transactions will be a “tale of two cities” with new issue transactions showing stellar performance and seasoned deals remaining under pressure from still-falling home prices.

Clear Skies Ahead for ABSTh ough the dramatic 2009-2011 performance improvements are leveling off , ABS will remain at the head of the class among all structured fi nance sectors next year. Autos will again drive new issuance in the coming year and remain an exemplary performer. Credit card ABS performance will also remain strong though issuance volume is likely to remain low. Conversely, student loan ABS, private student loans in particular, will show greater sensitivity to the fragile job market.

Despite the ongoing poor labor market conditions, most core consumer ABS credit quality measures improved signifi cantly over the past two years, following a period of rapid

deterioration through the recession. Th e exception is in the student loan ABS sector, where the direct linkage to the U.S. sovereign rating has resulted in a Negative Rating Outlook for FFELP student loan ABS and unemployment among recent college graduates has resulted in higher than anticipated defaults and ratings volatility in the private student loan space.

Despite the challenging underlying collateral trends, core ABS sector ratings proved resilient over time, with upgrades signifi cantly outpacing downgrades. In the most recent downturn, the vast majority of investment-grade ABS ratings exhibited very low levels of volatility. Given the higher quality collateral pools and structural enhancements now in place, it is expected that

core ABS ratings will continue to perform well.

Fair Weather for US CLOsStrong corporate credit trends bolster Fitch’s stable outlook for CLOs in 2012. Helping the case for CLOs is the fact that the structures proved to be eff ective emerging from the credit crisis and crippling recession relatively unscathed. Rating actions across CLOs

were generally confi ned to affi rmations in 2011. More of the same is expected in 2012.

Stable trends in the leveraged loan market, specifi cally stable credit profi les and low default

rates, continue to support Fitch’s forecast. Many legacy CLOs delevered signifi cantly from amortization and loan prepayments in 2011,

which resulted in increased credit enhancement for outstanding notes. Th is amortization is expected to slow in 2012 as many leveraged fi nance issuers took advantage of robust high yield bond and leveraged loan investor appetite over the past two years. CLOs experiencing early redemption calls are also expected to continue in 2012, with existing asset portfolios being sold into new issue CLOs.

Heavy loan refi nancing activity in late 2010 and throughout 2011 has signifi cantly fl attened the maturity profi le of the leveraged loan market for the coming years. Th is refi nancing activity has positively impacted CLOs that are no longer in their reinvestment periods, as senior CLO notes are repaid resulting in increased credit enhancement for remaining notes going into

Performance To Slowly Improve Under ‘Hazy’ Skies For U.S. Structured Finance In 2012By Kevin Duignan of Fitch Ratings

U.S. structured finance faces a somewhat hazy outlook next year with improving performance

metrics clouded by numerous macro-level economic, political and regulatory uncertainties.

While Fitch’s forecast is for generally stable performance across most U.S. structured finance

sectors, it is difficult to predict whether the fog of uncertainty will burn off or if a new round of

storms is right behind.

Kevin Duignan

Middle-market CLOs are

also expected to have

stable performance

throughout 2012.


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Market View

2012. Conversely, portfolio amortization has resulted in more concentrated loan portfolios with the potential for adverse selection, which has served to temper rating upgrades.

Middle-market CLOs are also expected to have stable performance throughout 2012. In 2011, the credit quality of the private borrowers that comprise these portfolios remained relatively stable. Fitch affi rmed most classes from CLOs backed by loans made to middle-market borrowers. Most of these transactions have delevered signifi cantly due to zero-tolerance triggers that divert excess interest proceeds to pay senior notes once a loss is incurred on the underlying portfolios. Th ese excess interest proceeds can oft en provide signifi cant payments to the CLO liabilities since middle-market borrowers pay a signifi cant premium for fi nancing compared with broadly syndicated borrowers.

Outstanding Fitch-rated middle-market CLOs have amortized an average of nearly 50% of their original portfolio balances to date. Loan amortization is expected to continue through 2012 as loans mature, resulting in increased credit enhancement to rated notes and calls on some transactions. Obligor exposure on a majority of these CLOs runs less than 50 obligors, which will likely limit potential upgrades on their CLO notes in 2012.

A Mix Of Sun And Clouds For CMBSTh e weather for CMBS performance is likely to be streaky in 2012. While performance metrics are showing signs of stability, lightning still has the potential to strike the large universe of underperforming loans. Liquidity has been returning to the U.S. CMBS market helping to limit losses through refi nancing, but current

macroeconomic uncertainty still has the potential to disrupt fi nancing in 2012.

Property market fundamentals are expected to continue to stabilize and possibly improve

modestly leading to Fitch’s view that investment-grade ratings will be mostly stable in 2012. However, non-investment-grade ratings will have greater potential for downgrades given the potential performance volatility of the sizable specially serviced loan book.

Hotels and multifamily properties, which through the cycle exhibited the worst delinquency performance, are now stabilizing or, in some markets, showing reasonably strong income growth. Conversely, properties with longer term lease agreements largely insulated against dramatic cash flow fluctuations, such as office properties, will continue to see mixed results, as major metropolitan markets may see rental growth and

smaller, weaker, mostly suburban markets will show continued weakness.

Larger metropolitan areas will continue to outperform smaller cities, tertiary markets, manufacturing hubs, and markets with heavy exposure to the housing industry downturn. Th is continues to make the Washington, D.C./Northern Virginia, New York metro, San Francisco, and Boston markets well positioned to take advantage of the economic recovery. Conversely, Phoenix, Detroit, Atlanta, Las Vegas, most Florida cities, and certain California markets will remain weak.

RMBS Remains Under A Black CloudTh e sector least likely to catch a break anytime soon remains RMBS. With another 10% drop in home prices projected, loss severities are likely to trend higher. A more pronounced risk in the coming year will be interest shortfalls, which may induce rating downgrades even on bonds that are performing well.

Despite modest improvements in delinquency roll rates, defaults are expected to remain elevated with high unemployment driving involuntary defaults and falling home prices driving strategic defaults from a growing population of underwater borrowers. Price declines, the overhang of distressed properties, and extending foreclosure and liquidation timelines will also continue to

pressure loss severities on defaulted loans.While U.S. home prices are nearing a

bottom, Fitch does not believe they are there yet, and prices will continue to decline in 2012. Improvements in borrower aff ordability and historically low interest rates will continue to be off set by weak consumer confi dence, tighter credit availability, and, most importantly, a huge overhang of existing and shadow inventory that needs to be cleared. In addition, distressed sales, which according to the National Association of Realtors averaged approximately 30% of existing sales this year, will continue to pressure prices in 2012 and add volatility. Under our base case view, U.S. home prices remain approximately 13% above sustainable values - albeit with signifi cant regional variations. With that said, Fitch believes this further correction will occur over several years with declines coming from infl ation-eroding (modestly declining) nominal values.

Regulators and policymakers will continue to play a key role in the development of the RMBS market next year. Greater clarity on key issues hanging over the industry, including GSE reform, outstanding Dodd-Frank provisions,

and servicing standards, settlements, and a revised compensation structure, would be a positive for a market still searching for its footing. In particular, the fi nal defi nition and implementation of qualifi ed residential mortgage rules and related risk retention rules will be a key milestone.

Th e lone bright spot in U.S. RMBS remains the small but slowly growing prime new-issue market. Transactions are characterized by very high credit quality borrowers and low LTV loans. Fitch expects these transactions to be among the strongest vintages in a decade despite continued weakness in most housing markets.

While U.S. structured fi nance performance no doubt turned a positive corner in 2011, the fog of economic, political and regulatory uncertainty blurs the forecast for 2012.

Kevin Duignan is a Group Managing Director and Head of U.S. Structured Finance for Fitch Ratings

Hotels and multifamily

properties, which through

the cycle exhibited the worst

delinquency performance,

are now stabilizing or, in

some markets, showing

reasonably strong income

growth.

Regulators and policymakers

will continue to play a key

role in the development of

the RMBS market next year.


Regulatory Reforms: CompletedRULE 193: ISSUER REVIEW OF ASSETSNew Rule 193 mandates issuer review of assets backing ABS to a ‘reasonable assurance’ standard that prospectus disclosure about the pool assets is accurate in all material respects. Also, new Reg AB Item 1111(a)(7) mandates disclosure re the nature of the review and its fi ndings.

Review may be performed in whole or in part by a third party. If results of review are attributed to a third party, they must be named as expert with expert liability. If a third party is used but results are attributed to the issuer, then the third party does not have to be named and should not be identifi ed in any offering communications.

Effective for public ABS with initial offering on or after January 1, 2012.

IMPACT: Positive. Rule takes an emerging best practice, expands on it in a reasonable way, and makes it industry standard. However, the issuer review needs to encompass the entire disclosure about the assets, not just aspects of diligence that are typically performed by third parties.

RULE 15Ga-1: REPRESENTATION AND WARRANTY BUYBACK HISTORY

Mandates reporting on Form ABS-15G by securitizers (both sponsors and depositors) as to repurchase demands and activity on outstanding ABS, public or private, that are held by non-affi liates.

Initial report for 2009-2011, due February 14, 2012, is required only if securitizer issued new ABS during that period. Quarterly reports starting in 2012, due 45 days after each quarter end, are required if securitizer has any ABS outstanding and held by non-affi liates, regardless of whether there is recent issuance. As to deals where sponsor and depositor are not affi liated, both must report.

IMPACT: Negative. The compliance burden on securitizers appears to vastly outweigh any possible benefi ts. While the rule appears straightforward, in practical application there is an exceptionally large degree of interpretive uncertainty, reducing the utility of comparisons across issuers. And the information to be reported under the rule does not get behind the numbers to explain a securitizer’s breach rate or buyback rate.

RULE 15d-22(b): ABS EXCHANGE ACT REPORTING

Final rule requires Exchange Act reporting for registered ABS for the life of the deal. Suspension is not permitted unless no outstanding registered securities held by non-affi liates. This is not retroactive to pre-Dodd Frank deals, pursuant to an SEC no-action letter.

IMPACT: Positive. Compliance systems for Exchange Act reporting need to be in place anyway. Continuation of reporting does not seem an undue burden.

Regulatory Reforms: PendingRISK RETENTION

Multi-agency risk retention proposed rules were published in March 2011, comment deadline was extended to August 2011. Timing of adoption remains uncertain.

Broad requirement is for 5% risk retention by sponsor with possible allocation to originator. Formats include vertical, horizontal, representative sample. For CMBS, certain third party held fi rst loss classes may qualify.

The premium capture feature as proposed would require a reserve for deal proceeds (and the value of a retained non-sub IO) in excess of par, on top of the 5%. Premium capture rules are above and beyond the Dodd Frank mandate, and would hamper private markets’ ability to fund loans to less creditworthy borrowers.

Exclusions for “qualifi ed residential mortgages” and for other asset types as proposed are very narrow. For example, 28% front end DTI limit for QRMs is very restrictive. Defi nition was designed to scope in only approx 30% of new originations - this is more conservative than Congress intended.

Complete exemption for GSEs, while in conservatorship, exacerbates the non-level regulatory playing fi eld which favors the GSEs, making it even more diffi cult to reduce the GSE’s market dominance.

By comparison, in the EU, CRD 2 imposes risk retention requirements, effective January 1, 2011, on EU regulated credit institutions, in the role of investor in or holder of exposure to credit risk of a securitization, such that originator or sponsor must retain a net economic interest of not less than 5% based on nominal value. Formats include vertical, fi rst loss horizontal, or random.share.

OUTLOOK: Negative. Risk retention rules as proposed may do more harm than good, because of inconsistent application across market sectors. QRM defi nition would hamper private markets’ ability to fund loans to all but the most creditworthy. Focus should instead be placed on rules that directly promote asset quality, transparency, and enforcement of investor contractual rights.

NRSRO REFORMS

SEC proposed a broad series of new rules for rating agency reform, as mandated by Dodd Frank, in May 2011. Comments were due August 8, 2011.

Proposals include: • An expanded Rule 17g-7 report to be published

with each rating action, with dozens of specifi c items required to be disclosed, including fi ve assumptions which if proven wrong would have the biggest impact on the rating.

• Disclosure about third party diligence used in ABS ratings, including identifi cation of the pr.ovider.These proposals will create a signifi cantly higher

compliance burden. As noted in the SEC’s summary

of its NRSRO examinations published in September 2011, the industry is already struggling with the existing compliance burden.

OUTLOOK: Generally positive. While these changes will have an overall positive effect, they may accelerate the trend for smaller NRSROs to combine with much larger organizations in order to spread the compliance costs, and may make it more difficult for new entrants to obtain an NRSRO designation.

CONFLICT OF INTEREST RULES

SEC proposed new rules to prohibit confl icts of interest in ABS offerings, as mandated by Dodd Frank, in September 2011. Comments are due February 13, 2012. Rule would prohibit ABS offering participants from engaging for one year in transactions that would give rise to a material confl ict of interest. Rule is designed to prevent offering of transactions that are “designed to fail” and by which failure offering participants would profi t.

Rule contains limitations as well as exceptions such as hedging.

OUTLOOK: Generally positive. Rule as proposed does not appear to expand scope beyond Congressional intent, and will provide meaningful protections. However, the rule will impose some compliance burdens, especially for large global organizations.

REGULATION AB2

Still pending is the SEC’s overarching set of proposed changes to Regulation AB (Reg AB2) from April 2010. In July 2011 the SEC re-proposed limited aspects of Reg AB to take into account changes mandated by Dodd Frank. Timing of adoption remains uncertain.

OUTLOOK: Generally positive but mixed. On the positive side, the loan level data disclosure and reporting requirements will ensure consistency of available information in an asset class. Also, the removal in the re-proposal of requirement to file a computer waterfall model is helpful. And the requirement for shelf eligibility that the transaction documents include provisions designed to ensure enforcement of contractual representations and warranties will improve investor confidence.

On the negative side, data requirements on underlying assets in resecuritizations will be impossible to meet for legacy assets. The requirement for shelf eligibility for a depositor CEO certification creates additional liability without a clear benefit to investors. The requirement for delivery of a complete preliminary prospectus 5 business days prior to pricing would result in too long of a delay. Finally, the companion proposal to extend Reg AB disclosure and reporting requirements to Rule 144A offerings remains possible or even likely, and that rule would severely hamper Rule 144A offerings that do not have clear rules under Reg AB or for which there are issues with required disclosures.

Securitization Regulatory Reforms ScorecardFollowing is a brief overview and scorecard for completed and pending regulatory reforms affecting securitization. —By Stephen S. Kudenholdt, Partner, SNR Denton

SPONSORED ARTICLE

Denton article.indd 1Denton article.indd 1 1/18/12 10:04 AM1/18/12 10:04 AM



Subprime auto loan asset-backed securitization has reported strong

performance throughout the past few years in stark contrast to the subprime mortgage sector. Investor demand for both prime and subprime auto ABS has been very strong, particularly for senior note classes, as investors have benefitted from good performance. Auto ABS represented the largest segment of ABS issuance in 2011 with $67 billion (57%) of total issuance and is expected to be the largest sector in 2012. In 2011, subprime auto ABS, represented by nine issuers, and has accounted for $12.8 billion or approximately 19% of total auto ABS issuance. This stable performance and healthy operating margins have attracted attention from several private equity firms who have invested in six subprime lenders over the past few years. The continuation of this positive story in 2012 will depend on a variety of factors discussed herein.

The graph below illustrates the performance

of subprime auto ABS by vintage year based on cumulative net losses. Although relatively stable, this graph illustrates that there has been some variability in loan performance for subprime ABS over the last 12 years. Not unexpectedly, there was some deterioration in performance for the 2006 through 2008 vintages as the recession occurred during the peak loss period for these vintages. The 2009, 2010 and 2011 vintages performed significantly better and are tracking more closely with earlier vintages, which had lower ultimate

loss levels.There are several reasons for subprime auto

loans’ relative strong performance: 1) auto loans are a short-term asset class, so the feedback loop on performance trends is relatively quick; 2) subprime auto lenders were more disciplined regarding credit underwriting going into the recession than subprime mortgage lenders; 3) competition in subprime auto lending declined at the start of the recession due to consolidation in the industry; 4) subprime auto loans have higher expected losses than prime auto loans but less volatility; 5) the used vehicle market has been strong since the end of 2008 resulting in higher recovery rates and lower loss severities; and 6) auto loan ABS transactions are structured to deleverage over time.

Since auto loans are a short-term asset class, issuers are able to respond quickly to deterioration in asset performance by adjusting underwriting standards and the pricing of their loans. Early

in the recession, many subprime originators had scaled back on origination volume in part due to reduced liquidity available to them. In addition, underwriting standards were tightened considerably on loans originated in 2009 – 2011 in response to the economic downturn, which resulted in significantly better loan performance. The short-term nature of this asset class also allows credit providers and rating agencies to quickly incorporate deterioration in performance into increased loss expectations, which translates into higher credit enhancement levels.

Even prior to the recession, subprime auto originators were

more disciplined in underwriting standards, loan terms and verification procedures than subprime mortgage originators. For example, most subprime auto lenders perform a verification of the borrowers’ information including residence, income and employment while subprime mortgage lenders tended to rely on stated income levels. Loan terms for subprime auto have remained fairly consistent over time and loan structures are pretty straightforward with fixed-rate, simple interest loans and maturities typically

of 72 months or less. Over the past several years, following the start

of the recession, the subprime auto industry faced less competition among loan originators as a result of consolidation, which also contributed to better performance as lenders were not competing aggressively for business. Some lenders, including Triad Financial, HSBC and Citi Financial, exited the space and sold their portfolios to other companies. Limited liquidity for many players also resulted in reduced origination volumes for many of the remaining lenders. The liquidity concerns have eased somewhat for many players and, during 2011, the trend in consolidation has reversed course as more lenders have started entering this space or expanding their lending which is not negative per se unless competition increases to such an extent that it causes lenders to give up underwriting discipline in order to compete for business.

Relative to loss severity, while subprime auto loans have higher absolute levels of losses than prime auto loans, the loss levels have proven to be less volatile over time. This is partly due to the smaller percentage impact of rising losses on a larger base. For example, a 1% change in losses is much more significant on a 2% base case in a prime auto transaction than it is on a 12% base case in a subprime deal. Higher cumulative losses in subprime transactions are not surprising considering the credit profile of the obligors. Subprime obligors normally have less financial flexibility available to them and may have less stable employment situations. In addition, most subprime auto loan pools do not have a high proportion of homeowner borrowers, but rather obligors whose largest asset is their automobile. In recent years, this has actually been a positive for subprime auto pools, as homeowners generally have experienced a larger shift in their financial flexibility given the burdens of mortgage debt, the reduction in credit availability and the corresponding negative wealth effect due to the housing market decline. Moreover, because autos are a depreciating asset and are thus not expected to appreciate, subprime auto did not experience a bubble in asset values as did residential real estate.

Also with regard to losses, the strength of the used car market since the end of 2008 as seen in the Manheim used car index depicted in the

Subprime Auto Loan ABS: A Positive Subprime StoryBy Rosemary Kelley, senior director, Kroll Bond Ratings

Source: J.P. Morgan ABS Performance Statistics.

Market View




Market View

graph below, has mitigated loan losses. Prices did drop dramatically from August to November 2008 due to the recession and concerns over the impending bankruptcies of GM and Chrysler; however, they rebounded quickly and have been strong throughout 2011. Demand for used cars has increased since the recession as more buyers have turned to used vehicles than had previously been the case. In addition, the supply of used vehicles has been limited as there are fewer vehicles coming off lease, fewer vehicles coming from rental fleets as the rental car companies are managing smaller fleets and keeping vehicles longer, and fewer vehicles available for trade-in as new vehicle sales declined

and have remained at lower levels than those prior to the recession. While there clearly has been some volatility in used car prices, losses in ABS transactions have generally been adequately covered by available credit enhancement. Nonetheless, as new car sales increase with the easing of recessionary pressures, the positive trend in used car prices could start to soften.

Lastly, in terms of transaction structure, auto loan ABS deals are structured to de-lever over time. These transactions are normally sequential pay structures, with the senior class receiving all principal payments until they are retired before the subordinated classes receive any principal payments. Credit enhancement is comprised of overcollateralization, subordination of junior classes, a reserve account (or letter of credit) and excess spread as the rate on the subprime assets normally exceeds the rate on the notes. Excess spread is also provided by receivables resulting in additional overcollateralization to the transaction. Credit enhancement

builds as the senior classes amortize and the subordinate class amounts remain outstanding. Additionally, the reserve account (or letter of credit) is normally a fixed dollar amount that grows as a percentage of the remaining note balance.

Subprime Auto Story Attractive To Private EquityThe positive performance story and potential for good returns have made subprime auto lenders an increasingly attractive investment opportunity over the past year. KBRA has noted an influx of capital, particularly from private equity, as can

be seen in the purchase of equity interests in several subprime auto finance companies. There are start-up firms such as CarFinance Capital that was funded by Perella Weinberg and is run by a management team from Triad. There have also been reports of additional private equity investments in subprime auto lenders.

The influx in capital can be a positive to the extent that it provides lenders with funding and the ability to grow their businesses. However, the increase in capital available and the increase in competition may place

pressure on companies to loosen credit standards in an effort to grow.

Will This Positive Story Continue In 2012?The continuation of this positive story for subprime auto ABS will depend on a variety of factors. The economy will be of primary concern as unemployment is a big driver of losses in subprime auto loans. The economic outlook is challenging for 2012, particularly given the ongoing concern over the potential impact of the European sovereign debt and financial crisis on the U.S. economy.

The ongoing strength of the used car market will continue to mitigate the severity of loan losses.

Although the used car market looks high relative to historic periods, as can be seen in the Manheim used car index above, we anticipate that used car prices will remain strong over the next year. The supply of used cars remains limited, as there are fewer vehicles entering the used car market due to lower new car production, lower lease rates, reduced new car sales and smaller rental fleets. KBRA will continue to monitor longer-term trends and the potential for cyclical softening in used car prices.

Subprime lenders have been able to navigate through an unfavorable economic and unemployment environment over the past few years. They tightened underwriting standards early in the recession and maintained relatively tight standards over the past few years. Although there has been some loosening of underwriting standards over the past year, this is not surprising given the extreme degree to which lenders had cut back on lending and tightly reined in their underwriting standards for loans. In 2012, KBRA expects auto lenders to continue to show discipline in underwriting; however, the increase in competition and potential desire for growth will need to be monitored carefully.

Potential risks can be seen by looking at some of the lessons learned by the subprime auto industry in prior cycles. In the mid-to-late 1990s, competition caused auto loan originators to loosen underwriting standards in order to drive growth in originations. In addition, some of these firms were start-ups with limited financing sources. Lastly, some of these firms increased originations without building adequate servicing and back-end operations to manage this growth. This confluence of factors caused some firms to file for bankruptcy and caused significant consolidation in the industry during this period.

Today, there are a number of subprime auto lenders and management teams who have a good track record of originating and servicing subprime auto loans through several business cycles. These lenders understand the risks associated with subprime lending and should be able to manage those risks through proper underwriting, pricing and servicing of loans. KBRA believes the proper

management and servicing of loans in subprime auto lending is critical due to the higher absolute level of losses. The ability of ownership and management to draw on their successful experience and benefit from the lessons of past cycles of excessive growth as they build and expand their businesses will be critical to the continued success in the subprime auto sector.

Auto Finance Lender Private Equity Firm Date of Investment

Santander Consumer Warburg Pincus October 2011 Kohlberg Kravis Roberts Centerbridge Partners

Exeter Finance Corp. Blackstone August 2011

WestLake Services Marubeni July 2011

First Investors Financial Services JAM Special Opportunity Fund May 2011 (Seymour Jacobs) October 2011

CarFinance Capital Perella Weinberg May 2011

Flagship Credit Perella Weinberg September 2010

Source: Manheim Consulting


ASF Daily Monday, January 23, 2012Exhibit Hall & Exhibitors




had last year. The venue is much more right-sized to this event, which is the largest capital markets event in the world with approximately 4500 attendees expected. In the past couple weeks, every issuer and investor I have spoken with have told me that they are completely booked up with meetings with clients, so our aim to provide the most conducive setting for business meetings appears to have been achieved. The return to Las Vegas is effectively an attempt to return to business as usual, even though we obviously have some pretty significant hurdles still to clear in our market right now.

SI: Where does the industry stand heading into the

conference?

DEUTSCH: I think we’ve arrived at the new normal for most of the consumer ABS asset classes, but we clearly haven’t made much progress on the RMBS or CMBS fronts, where issuance volumes still remain extremely low. The question now is whether and when will the federal government get out of the way of private-label RMBS, and how will the private markets respond when/if they do? There was a lot more optimism last year that something on GSE reform could get seriously debated in the first part of this Congress. But I think going into 2012, particularly with the recent spat that we saw over the Richard Cordray’s recess appointment as CFPB Director, it seems extremely clear that there will be limited, if any, serious progress made in Congress on the things that are going to be instrumental in determining the fate of the GSEs.

Most of the work that Congress will do this year will be laying the groundwork for 2013. Given the enormity of ideas around GSE reform, it’s not a terrible idea to have a full year of getting proposed legislation right. But given the split in Congress between Democratic control of the Senate and Republican control of the House, it’s extremely unlikely that anything will move forward in 2012 that would result in material changes.

SI: What are the ASF’s objectives for the coming year?

DEUTSCH: The biggest priority for the ASF in the coming months is going to be a significant gear shift from working on regulatory comments to moving towards common industry implementation of final regulatory rules. We have a significant amount of work to do surrounding other Dodd-Frank rule makings that are going to occur with certainty in 2012—items such as the Volcker rule, Section 621 which addresses conflict of interest, and alternatives to ratings for risk-based

capital. I also expect the Securities and Exchange Commission will release final Reg AB II rules in the next month or so.

With Reg AB II, risk retention and the myriad of other Dodd-Frank rules expected to come out in final form though in 2012, we’re going to see an enormous amount of ASF member time invested in creating the market standards and practices

that are going to be critical for new transactions to get done on a timely and efficient basis. I believe that is ultimately what the ASF is best-positioned to do over the course of the next couple years—create market standards and practices that lowers the implementation costs to ASF members to comply with the massive flow of Dodd-Frank regulation coming out.

SI: Do you think there are still signifi cant changes to federal mortgage programs like HARP to come from the Obama administration? With a lack of knowledge on what policy changes are in the pipeline, how can investors prepare for the evolving refi nance and prepayment atmosphere?

DEUTSCH: I wouldn’t expect any new changes from the administration on either homeownership preservation policy or massive refinance policies. I think they’ve shot all the bullets that they can shoot. And federal deficit hawks are going to be pretty guarded with handing out any new costly bullets. The presidential election could shake things up a bit, but a returning Obama or a new Republican Administration would have to dig a lot of coins out of the couch cushions to produce additional effective policy changes. External events to the housing market, like the European sovereign debt crisis, will likely be much more impactful to the value of outstandings.

SI: Is the ASF closely tracking the ongoing legal battles over put-backs in soured RMBS and the group of state attorneys general’s settlement with the mortgage servicers? What do you think may happen with those cases in 2012?

DEUTSCH: The amount of litigation related to RMBS will continue to be substantial in 2012 and beyond I think. For the past year, I have expected to see some formal, final settlement with the attorneys general within weeks, but that process continues to be ongoing with no clear end in sight. Last year, a group of ASF members and staff even flew out to Iowa to meet with a big group of the state attorneys generals’ staff to impress upon them that our investor and guarantor members continue to be very fearful of how the attorneys generals could impose a settlement that would ultimately impair the value of outstanding RMBS, even though the investors are passive participants in the servicing of the assets. Our markets are going

to be filled with the acrimony related to litigation for some time but hopefully at some point that acrimony subsides and the industry can focus back on new deal making that gets more credit flowing back to consumers again.

SI: With no end in sight for litigation, regulatory uncertainty and slow or fl at industry growth, will 2012 be a lost year for securitization?

DEUTSCH: Absolutely not. I think there are a number of areas like autos and emerging assets that will continue to evolve—and hopefully increase—in overall issuance volumes. But even for areas like RMBS and CMBS I think there’s still going to be traction gained on getting some new deals out. I fully expect we’ll see a number of newly originated collateral transactions, but we won’t see any kind of return to normal in the RMBS and CMBS markets for some time.

SI: What are the asset classes getting the most buzz this year?

DEUTSCH: Auto ABS will continue to see the largest issuance volumes by an exponent over other areas in the securitization sector. More unique transactions such as whole business securitizations and other types of intellectual property royalties may see some growth, but those overall issuance numbers will look like rounding errors compared to the historical RMBS volumes that are missing from today’s market.

Solar panel ABS has definitely gotten a lot of buzz, but there is more work involved there for issuers to get investors and rating agencies convinced of the stability of the cash flows over time, since there is relatively limited historical data. The underlying solar panel assets are being originated at a relatively brisk pace, so there’s a demand at the consumer level, but there’s still some time before it translates to the securitization level.

SI: Last year the market seemed optimistic for the long-awaited RMBS Renaissance—this year, less so. When will we see regular private-label RMBS issuance?

DEUTSCH: That’s the trillion dollar question for the markets to figure out. I don’t think anyone expects 2012 or even 2013 to be any kind of banner year for the RMBS market. I think a lot of the debate about private-label RMBS restart is path-dependent on the debate around Fannie, Freddie and FHA. If we continue to have very high conforming GSE loan limits in the $600,000 range, that’s going to leave very little jumbo collateral for the private markets to securitize. Since 2007, everyone has looked towards the next year as the beginning of a return to normal. Unfortunately, each year the MBS markets are frustrated by the absence of that return. I don’t think anyone at this point can make a stellar prediction as to when we’ll see a return to normal in the MBS markets.

Q&A With The ASF(Continued from page 1)

Tom D eutsch


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2012 Annual MeetingMay 21- May 22, 2012Four Seasons I Washington, D.C.

BY AN D FO R TH E SE C UR IT I ZAT ION INDUSTRY

The Annual Meeting will include several substantive sessions on issues of broad interest to the industry, including very senior policymaker participation on the key issues affecting our industry.

2011 Annual Meeting speakers included several high-profi le policy makers, including Chairman Mary L. Schapiro of the SEC and U.S. Senator Mark Warner who provided views on key changes to our industry.

The 2012 Annual Meeting will provide excellent networking and supporter opportunities. Additional details will be posted shortly after the conclusionof ASF 2012.

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uncertainty. At a crowded featured address, Congressman Ed Royce (R—Calif.), didn’t try to sugarcoat the regulatory landscape. “We’re through about 13% in terms of Dodd-Frank implementation,” he said, as the audience groaned. Royce, an early dissenter to Dodd-Frank, didn’t provide much comfort as to the potential effects of the regulation. “We’re dealing with a world that’s a mouse click away from moving capital to Britain, if we’re not careful,” he said.

One official at a Midwest investment house told SI he expected a toned down atmosphere. “Both the continued performance of the mortgage sector and the consistent shift of players on Wall Street will dampen the mood somewhat,” he said. An executive at a major investment bank agreed. “We’re not going to have a party,” he said. “We want to keep a low profile, especially while people are still out there losing their jobs.”

There should be a decent-size crowd to keep a low profile in. The ASF recorded 4,482 pre-registered conference-goers, with another 300 to

600 expected to register on-site, according to ASF executive director Tom Deutsch. That translates to an uptick of around 400 in attendance from last year’s conference in Orlando, Fla.

Many attendees predicted a large post-conference bump in issuance, with one issuer even saying it could double or triple the more than $3 billion in new deals seen in just the week prior to the conference.

The market can expect overall growth this year, according to Hwang, as issuers get a feel for investor appetite. “Investors have been trying to get the message out that they want more auto and credit card issuances, and my feeling is that the issuers are getting that message,” he said. London-based attorney Sally Onions added: “Investors are looking for well-known names to issue on a repeat basis.” She noted the cost to investors of doing the due diligence on untried issuers.

Onions also noted an increase in conference attendance by non-U.S. players, and especially European, issuers hungry to tap the U.S. market. “They’re looking outside of Europe to the States, particularly in the credit card and [residential mortgage-backed securities] space,” she said.

Industry Pushes(Continued from page 1)

quarter. It looks like they’ve got some dry powder they’re ready to put to work, having come back from the holidays with a constructive outlook.”

Sell-side industry players aren’t the only ones with a dog in the fight, however. An RMBS investor told SI that picking other investors’ brains on strategy was one of the chief benefits of attending the conference. “I’d rather talk to other investors and hear about what they’re doing and what areas they think are likely to do well this year than sit in a panel that takes on the legal minutia that, as an investor, we don’t need to be diving into head-on ourselves.”

Multiple sources told SI they would be concentrating almost exclusively on the one-to-one meetings with other industry professionals. “I have 16 or 17 meetings lined up,” an investor said. “The way I see it is you can spend an hour in a session, or 15 minutes with someone over a beer and get 10 times the info in a quarter of the time.”

As for what to expect after the conference: “Diversity,” according to Millette. “There’s a whole raft of deals coming up, including whole business securitization, residential mortgages, auto, student loans, other corporate securitizations, bank loans, CLOs, CMBS and insurance-linked securities,” he added. “I don’t know what volumes will be completed, but the array of offerings in January and early February will be rich and very broad.”

Buyside Presence(Continued from page 1)

Seen And Heard

Viva Las Vegas!Attendees were happy to be back in Vegas this year, as the American Securitization Forum 2012 conference returned to its traditional home base. Last year’s show saw conference-goers sharing space with the Avatar Wizards Conference (remember them?) in drizzly Orlando, Fla. This year the industry gathered in the swanky Aria conference center in Vegas’ new City Center development. The atmosphere of the Aria’s lobby casino spread fast, with some games of chance going on inside the conference center. Morningstar Ratings had a wheel-of-fortune game complete with casino-style lights, and Standard & Poor’s had a game where landing on “RMBS” or “CLO” meant scoring an iTunes gift card. But the S&P game had only winners, no losers – if only the rest of Vegas worked that way.

Misplaced Metaphor?Conference-goers in the Exhibit Hall might have been surprised and impressed to see an elaborate house of cards being built next to Potter Anderson Corroon’s booth. The firm had hired a Harvard-trained architect who specializes in creating elaborate card constructions to whip up a five-foot tall tower. Hopefully, no one paid too much attention to all that rhetoric around the causes of the financial crisis... or that book, “House of Cards: A Tale of Hubris and Wretched Excess On Wall

Street” that came out from William Cohan a couple years back.

Do Work Or Bet On Football?One rating agency official told SI he was facing a tough choice Sunday morning. The ASF was screening championship football in the Exhibit Hall, and even providing beer, but were they taking action? “I’m trying to figure out how much work I have to do today, I might be able to get away and watch the game in the Sports Book,” he said, hoping to be able to place a few bets.

What’s That You’re Wearing?Société Générale had a continental approach to swag this year. The French bank had a selection of branded toiletries to give away at their booth in the exhibition hall. Attendees wishing to pamper themselves could sample some “Blue Mist” scented body lotion from SocGen.

Yeah, I’m...Cautiously optimistic. Possibly the all-time favorite catchphrase of the sector, it was part of several market players’ assessments of Sunday’s mood on the ground. One was kind enough to clarify how the cautious optimism here in Las Vegas compared to the cautious optimism at ASF’s most recent conference in Orlando, Fla. “I think last year it was optimism that things would just stay the same, but this year it’s optimism that things will actually get better.”

EDITOR Steve Murray

MANAGING EDITOR Graham Bippart

REPORTERS Marissa Capodanno, Hugh Leask, Amelia Granger

PRODUCTION Dany Peña, Michelle Tom

PHOTOGRAPHER Edyta Sokolowska

GROUP PUBLISHER Allison Adams

BUSINESS DIRECTOR Gauri Goyal

SENIOR MARKETING MANAGER Ismeala Best

MARKETING MANAGER Laura Pagliaro

ASSOCIATE PUBLISHER Pat Bertucci

CEO Jane Wilkinson

CHIEF OPERATING OFFICER Steve Kurtz

Agenda Changes

Monday, Jan. 23, 2012 Eric Reusch, Program Manager, Student Lending, Consumer Financial Protection Bureau, has been added as a panelist to Student Loan ABS Sector Review, 3:05-4:05 PM, Pinyon Ballroom 3.

Brian Ye will no longer be a panelist on RMBS Servicing – Economics and Regulatory Reform, 4:30-5:30 PM, Pinyon Ballrooms 1 & 2.



ASF attendees mingle in the Exhibit Hall. Seth Messner and Brandon

Hadley of Katten Muchin Rosenman, LLP

The industry took in championship football on the first

day of the ASF show.

Brian Vonderhorst of Morningstar, Inc. and Mark

Meifofer of The Seaport Group

Bryan Berg, an expert at card balancing acts, makes a house of cards for Potter Anderson Corroon

Wendy Cohn, Diana Meireles and Gina DellaCava of Fitch Ratings

John Lewis of CBIZ MHM, LLC, Mike Rodgers of Finacity Corporation and Lisa Singman of Moody’s Investors Service

Marty Saucedo and Lee Watanabe of American

Honda Finance Corp. and Brian Lord of Citi

Sekiko Sakai Garrison of Andrew

Davidson & Co., Inc.; Louis Geibel and

Jeffrey Everhart of Christiana Trust

Sven Osang and Cedric Probst of DZ Bank AG and Tony Brown of Nord/LB

Attorney Advertising © 2012 Bingham McCutchen LLP One Federal Street, Boston MA 02110 T. 617.951.8000 Prior results do not guarantee a similar outcome.

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cars ii industry pushes through winds …las vegas monday, january 23, 2012 buyside presence a big...

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