FDIC's Final Safe Harbor Rule Imposes New Securitization Standards

On September 27, 2010, the Board of Directors of the FDIC approved a final rule, codified as 12 C.F.R. § 360.6, entitled “Treatment of financial assets in connection with a securitization or participation,” which will become effective on December 31, 2010. The rule (the “Safe Harbor Rule”) has important implications for disclosure and risk retention requirements for asset backed securities and other securitizations. This memorandum briefly described the background to the FDIC’s repudiation power as it relates to the Safe Harbor Rule, summarizes the principal provisions of the Rule, and assesses the impact of the Safe Harbor Rule in light of related regulatory developments.