Wells Fargo To Make The First CMBS Deal Adhering To New Dodd-Frank Regulations
Wells Fargo is issuing an $871M CMBS that will be the first to comply with new Dodd-Frank regulations.
Meant to make commercial mortgage-backed securities safer for investors, the new regulations require banks to keep 5% of the loan's value on the books, keeping issuers from selling loans entirely in the form of bonds and limiting borrowers’ access to credit.
Wells Fargo's upcoming bond—expected to be sold this week—could determine whether Wall Street banks will stay in the $566B business of packaging CMBS deals. If banks exit it will be a blow to the bond business, which has already seen a 30% decline in revenues these past three years due to increased regulation and shrinking customer volume. [Bloomberg]