Governance |
GOP: Ease Restrictions on CLOs
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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.
