RT Journal Article
SR Electronic
T1 Regulatory Fallout from Enron
JF The Journal of Structured Finance
FD Institutional Investor Journals
SP 31
OP 35
DO 10.3905/jsf.2007.684863
VO 13
IS 1
A1 Brandon Becker
A1 Russell J. Bruemmer
A1 Soo J. Yim
A1 David A. Luigs
A1 Clare Bracewell Schmitt
YR 2007
UL https://pm-research.com/content/13/1/31.abstract
AB On January 11, 2007, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Securities and Exchange Commission published in the Federal Register a final statement (Statement) on complex structured finance transactions (CSFTs). The guidance sets forth the types of internal controls and risk management policies and procedures financial institutions should develop to help them identify, manage, and address the heightened legal and reputational risk presented by some CSFTs. Successful implementation of these policies and procedures will require significant allocation of a financial institution's resources to its legal and compliance infrastructure. The Statement represents a substantial retrenchment from the original regime of heightened scrutiny that the regulators had recommended in 2004. Nevertheless, it suggests that financial institutions engaged in CSFT activities may face the risk of being viewed as “gatekeepers” responsible for reviewing their customers' business dealings and corporate governance as may be warranted. Accordingly, prior to entering into a CSFT, each institution should ensure that its policies and procedures provide clear, specific, and practical guidelines.TOPICS: Legal and regulatory issues for structured finance, credit risk management, information providers/credit ratings