Lawmakers Taking Another Stab At Risk Retention Relief For CLOs

Lawmakers taking another stab at risk retention relief for CLOs

A bipartisan bill that would exempt certain collateralized leveraged obligations from risk-retention requirements has been reintroduced in the House of Representatives, following last year’s failed legislative attempt at carving out “qualified” CLOs.
The legislation, sponsored by Rep. Andy Barr, R-Ky., and Rep. David Scott, D-Ga., would create a “qualified” category of CLOs. It is modeled on an exemption that allows sponsors of residential mortgage bonds to avoid holding on to 5% of the economic risk of deals if the loans used as collateral demonstrate a lower risk of default. For mortgages, the standards are the same as those for loans …

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