Jul 27, 2009By Diana Golobay
The Council of the European Union on Monday adopted new regulations imposing a legal framework on credit-rating agencies and introducing the requirement of 5% risk retention by originators. A major directive within the new regulations tightens capital requirements for European banks. In an effort to improve the framework for securitization practices, the regulation requires originators to retain 5% of risk transferred or sold to investors. Trade groups Stateside remain categorically opposed to a 5% risk retention.
