GOP: Ease Restrictions on CLOs

By Stephen Barlas
May 2, 2016

House Republicans are initiating an effort to eliminate restrictions on collateralized loan obligations (CLOs), which banks provide to companies to help with various financing needs. CLOs are a form of a securitization, but more like a hybrid combined with a portfolio loan.


Credit risk retention rules adopted in October 2014 by several federal agencies have hamstrung the CLO market. Now Rep. Andy Barr (R.-Ky.) has introduced a bill (H.R. 4166) that would create a “qualifying CLO” exemption to the Dodd-Frank risk retention rules. “This meaningful change would support continued investment in CLOs, while still ensuring adequate safeguards through standards on the quality of assets, portfolio diversification, minimum capital structure, alignment of interests, and proper reporting and disclosure and manager regulation,” says Tom Quaadman, vice president of the Center for Capital Markets Competitiveness, U.S. Chamber of Commerce.


Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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