Bank of America Corp., Citigroup Inc. (C) and Morgan Stanley (MS) are among more than 20 companies forming a trade organization after some members defected this month from the existing American Securitization Forum.
The Structured Finance Industry Group will “be an advocate for the structured finance and securitization community, share best practices and innovative ideas, and provide educational opportunities for our members,” Reggie Imamura, a PNC Financial Services Group Inc. (PNC) executive and chairman of the group’s board, said today in an e-mailed statement.
The American Securitization Forum was thrown into turmoil this month after most of its board quit in a dispute with its executive director over governance and bonuses. That group today took its first public action since the exodus, sending a comment letter to the Basel Committee on Banking Supervision on capital requirements for bonds backed by loans and leases.
The Structured Finance Industry Group, which was mainly started by sellers of securitized debt and the firms they hire, said that it intends to represent a range of interests in the market, from issuers and dealers to rating firms, accounting companies and investors. Global issuance of such bonds without government backing exceeded $500 billion last year, according to newsletter Asset-Backed Alert.
A list of 21 firms that the group said will “actively participate” in its formation also included Wells Fargo & Co. (WFC), Deutsche Bank AG (DBK), a Ford Motor Co. (F) unit, law firm Cadwalader, Wickersham & Taft LLP, Ernst & Young LLP and Fitch Ratings.
While the list didn’t include any that mainly focus on managing money, more than 50 investor firms have expressed interest in learning more about the organization, Patrick Tucker, a spokesman for the group, said in an e-mail. “We expect these organizations, among others, to be an important voice” and will seek “to add several investors and firms from other sectors to the board in the near future,” he said.
The resignations from the ASF came after the board attempted to remove its executive director, Tom Deutsch, and was unable to fire him because of the way the association’s governing documents are written, six people familiar with the matter said this month, asking not to be named because the conflict wasn’t public.
Part of the dispute concerns bonuses that Deutsch was paid, the people said.
Deutsch said in a statement e-mailed March 11 that the ASF would remain active, representing the “breadth and depth of the structured-finance markets.” He said his compensation had been consistent with research conducted by Mercer Consulting specific for the ASF, “input from a number of ASF advisory board members and consistent with the annual compensation of my predecessor.”
The association was founded in 2002 as part of the Securities Industry and Financial Markets Association, Wall Street’s biggest lobbying group. In 2010, it decided to split off from Sifma in a contentious divorce, during which Deutsch was allowed to set up the ASF as a separate entity with himself as the sole member and director, one of the people said.
The ASF said in a statement today about its comment letter that its members exceeded “300 firms, including issuers, investors, servicers, financial intermediaries, rating agencies, financial guarantors, legal and accounting firms, and other professional organizations involved in securitization transactions.” In a January statement, the group said it had more than 330 members fitting a similar description.
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