After years of regulatory barrage – which often inadvertently hit the leveraged loan market – the situation may have stabilized. In fact, we may even be heading to the point where reasonable FinReg fixes could be in the offing. And, perhaps surprisingly, regulatory refinements may be most likely to come from the regulators themselves. In January, President Trump signed an executive order (“EO”) laying out his core regulatory principles and requiring the Treasury to prepare reports identifying regulations that did not correspond to the core principles (and that were ripe for fixes).
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Financial Regulation Reform: Treasury or the House, Take Your Choice?
Recently, two important financial regulatory reform efforts were launched, each of which was large in scope and could have important ramifications for the loan market and beyond. As reported by the Wall Street Journal, on June 7th, the House of Representatives passed the CHOICE Act, a sweeping bill that would repeal much of the 2010 Dodd-Frank Act.
Financial Regulatory Reform: Here Comes the CHOICE Act
Last week, Congressman Jeb Hensarling (D, TX), Chairman of the House Committee on Financial Services, introduced the CHOICE Act, a sweeping bill that would repeal much of the equally sweeping 2010 Dodd-Frank Act. Importantly for the loan and CLO markets, among the provisions that would be repealed would be the risk retention rules for CLO managers (and everyone other asset class other than residential mortgages) and the Volcker Rule restrictions on banks that prevent them from owning the debt securities of CLOs that hold anything other than loans.
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