WASHINGTON — The Joint Forum
today released its paper entitled Credit Risk Transfer
– Developments from 2005 to 2007. “This paper is contributing significantly to
the understanding of the causes of the credit market turmoil,” said John C.
Dugan, Comptroller of the Currency and Chairman of the Joint Forum. “Particularly relevant is the report’s focus
on two financial instruments that have been used widely to transfer credit
risk: collateralized debt obligations
referencing ABS (ABS CDOs) and collateralized loan obligations (CLOs).
“While it is critical to understand the causes
of the market turmoil, market participants must also focus on actions to take
to increase the resilience of markets and institutions going forward,” Mr. Dugan said. “To that end, this
report provides a number of new recommendations applicable to all market
participants that enhance the earlier recommendations of the Joint Forum’s 2005
Credit
Risk Transfer paper. I urge all
significant participants in these markets to implement these
recommendations. In 2009, the Joint
Forum will survey these participants to assess the extent to which they have
done so.”
This paper was developed in
response to a request from the Financial Stability Forum (FSF) in March 2007 to
consider the extent to which the Joint Forum's March 2005 paper Credit Risk Transfer (CRT) required
updating as a result of the continued growth and rapid innovation in the CRT
markets. While development of the paper
was underway well ahead of the market disruption that began in the summer of
2007, it formed the centerpiece of the Joint Forum's submission to the FSF in
support of its work on the market turmoil. In fact, the paper was prepared on an
accelerated schedule so that it could be presented at the March 2008 meeting of
the FSF.
The paper is
available on the Web sites of the Bank for International Settlements (http://www.bis.org), International
Organization of Securities Commissions (http://www.iosco.org), and the International Association of
Insurance Supervisors (http://www.iaisweb.org).
The Joint Forum was established in 1996 under the aegis of the Basel Committee on Banking Supervision, IOSCO, and the IAIS to deal with issues common to the banking, securities and insurance sectors, including the supervision of financial conglomerates. Comptroller of the Currency John C. Dugan has been Chairman since September 2007.
Related Link:
# # #
