[Federal Register Volume 79, Number 125 (Monday, June 30, 2014)]
[Notices]
[Pages 36872-36873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15355]


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DEPARTMENT OF THE TREASURY


Public Input on Development of Responsible Private Label 
Securities (PLS) Market

AGENCY: Office of the Undersecretary for Domestic Finance, Department 
of the Treasury.

ACTION: Notice and Request for Information.

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SUMMARY: Consistent with the Obama Administration's commitment to 
openness and transparency and the President's Open Government 
Initiative, the Department of the Treasury (Treasury) is seeking public 
input on the

[[Page 36873]]

private sector development of a well-functioning, responsible private 
label securities (PLS) market.

DATES: Comment Due Date: August 8, 2014.

ADDRESSES: Interested persons are invited to submit comments regarding 
this notice according to the instructions for ``Electronic Submission 
of Comments'' below. All submissions must refer to this document. 
Treasury encourages the early submission of comments.
    Electronic Submission of Comments. Interested persons must submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov. Electronic submission of comments allows 
the commenter maximum time to prepare and submit a comment, ensures 
timely receipt, and enables Treasury to make them available to the 
public. Comments submitted electronically through the http://www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.
    Note: To receive consideration as public comments, comments must be 
submitted through the method specified above.
    No Facsimile Comments. Facsimile (FAX) comments will not be 
accepted.
    Public Inspection of Public Comments. In general, all properly 
submitted comments will be available for inspection and downloading at 
http://www.regulations.gov.
    Additional Instructions. Please note the number of the question to 
which you are responding at the top of each response. Though the 
responses will be screened for appropriateness, in general comments 
received, including attachments and other supporting materials, are 
part of the public record and are immediately available to the public. 
Do not enclose any information in your comment or supporting materials 
that you consider confidential or inappropriate for public disclosure.

FOR FURTHER INFORMATION CONTACT: For general inquiries, submission 
process questions or any additional information, please call 202-622-
2108. All responses to this Notice and Request for Information should 
be submitted via http://www.regulations.gov to ensure consideration.

SUPPLEMENTARY INFORMATION: Treasury is seeking public comment on the 
following questions:
    1. What is the appropriate role for new issue PLS in the current 
and future housing finance system? What is the appropriate interaction 
between the guaranteed and non-guaranteed market segments? Are there 
particular segments of the mortgage market where PLS can or should be 
most active and competitive in providing a channel for funding mortgage 
credit?
    [ssquf] Comments could address: The role of the government in the 
mortgage market; access to mortgage credit; cost of mortgage finance; 
capital available for this type of investment; the source of loans for 
securitization; product and structure innovation; types of mortgage 
products; and borrower characteristics.
    2. What are the key obstacles to the growth of the PLS market? How 
would you address these obstacles? What are the existing market 
failures? What are necessary conditions for securitizers and investors 
to return at scale?
    [ssquf] Comments could address: Structural, operational, economic, 
regulatory, loan level data, other disclosures, and legal challenges.
    [ssquf] Challenges may include methods of investor protections; 
desire for standardization; secondary market liquidity and size; 
underwriting standards; origination volumes; servicing practices; 
credit ratings; and risks arising from borrower default.
    3. How should new issue PLS support safe and sound market 
practices?
    [ssquf] Comments could address: Underwriting standards; 
transparency and disclosure requirements; borrower protections; 
alignment of interests; and regulatory oversight.
    4. What are the costs and benefits of various methods of investor 
protection? In particular, please address the costs and benefits of 
requiring the trustee to have a fiduciary duty to investors or 
requiring an independent collateral manager to oversee issuances.
    [ssquf] Comments could address: Willingness of parties to accept a 
fiduciary duty; capital requirements and sufficiency; fiduciary duty as 
a means of addressing conflicts of interest; and alternative methods of 
investor protection.
    5. What is the appropriate or necessary role for private industry 
participants to address the factors cited in your answer to Question 
2? What can private market participants undertake either as 
part of industry groups or independently?
    [ssquf] Comments could address: Methods of achieving agreement 
around establishment of industry-wide standards; or development and 
adoption of a limited number of structural options from which 
securitizers can choose.
    6. What is the appropriate or necessary role for government in 
addressing the key factors cited in your answer to Question 2? 
What actions could government agencies take? Are there actions that 
require legislation?
    [ssquf] Comments could address: Suggested role in facilitating 
resolution of issues impeding the return of an active PLS market; 
actions that are required from government agencies; and actions that 
require legislation.
    7. What are the current pricing characteristics of PLS issuance 
(both on a standalone basis and relative to other mortgage finance 
channels)? How might the pricing characteristics change should key 
challenges be addressed? What is the current and potential demand from 
investors should key challenges be addressed?
    [ssquf] Comments could address: Amount and sources of demand for 
new issue PLS; cost of funding and capital; appropriate parties or 
processes to address the current pricing of PLS issuance; pricing in 
other mortgage financing channels.
    8. Why have we seen strong issuance and investor demand for other 
types of asset-backed securitizations (e.g., securitizations of 
commercial real estate, leveraged loans, and auto loans) but not 
residential mortgages? Do these or other asset classes offer insights 
that can help inform the development of market practices and standards 
in the new issue PLS market?
    [ssquf] Comments could address: Relevant terms, standards, and 
covenants; key differences in underlying assets; comparisons of 
structural features; documentation; alignment of interests; relative 
value, relative risks, and required returns; and examples of other 
asset classes' emergence and growth over time.
    9. Is there any additional information regarding the PLS market not 
already addressed that you would like to provide?

David G. Clunie,
Executive Secretary, Department of the Treasury.
[FR Doc. 2014-15355 Filed 6-27-14; 8:45 am]
BILLING CODE P