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In the Marketplace
In connection with a report published by Fitch Ratings exploring the quantitative impact of the Basel II capital charges on a range of structured transactions typical of deals in the marketplace, the company found that Basel II will have an important effect on the securitization activity of banks by creating a new framework for how banks measure and allocate capital against credit risk.
The report, Basel II: The 'Bottom-line' Impact on Securitization Markets, evaluates the amount of Basel II capital that banks must hold on an unsecuritized pool of assets in comparison to holding a securitized structure of these same assets. It details how the new capital framework might affect investment flows within structured product markets. Fitch finds that banks could potentially face lower capital charges by investing in rated securitization structures rather than by directly holding a comparable pool of unsecuritized assets, particularly for credit card asset-backed securities (“ABS”), commercial mortgage-backed securities (“CMBS”), and residential mortgage-backed securities (“RMBS”). Fitch also notes that Basel II could influence how banks structure their securitization deals as they “will face strong pressures under Basel II to minimize their exposure to sub-investment grade tranches, given the significant amount of regulatory capital they will have to hold against these positions,” according to Krishnan Ramadurai, Senior Director, Financial Institutions, Fitch Ratings.
The ultimate effect of Basel II on the securitization markets will depend in large part on how banks identify and respond to these new regulatory capital incentives. According to Kim Olson, Managing Director, Algorithmics, “the impact of Basel II on a bank's decision to securitize a portfolio of assets will depend on a complicated interplay of factors, including, for example, the inherent default risk and recovery rates of the underlying assets, the type of asset or product being securitized, the tranching of the resulting securitization structure, and the features or conventions of the structuring process, such as excess spread and reserve funds.”
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.