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A joint initiative of eight industry associations strongly objects to the Commission’s alternative proposal to amend the CRD to address incentives in the “originate-to-distribute” model. The new proposal aims to prohibit European investment in obligations where the originator or sponsor fails to retain a 10% interest in positions having the same risk profile.
“We agree with the Commission that there have been difficulties with certain loan origination practices, as well as weaknesses in risk management procedures at a number of financial institutions”, the associations state, “but unprecedented credit market conditions have also played a critical role.”
The joint paper criticizes several fundamental flaws of the Commission proposal. It will increase costs and damage the competitiveness of
However, a Commission spokesman already stated in last ECON meeting responding to a question posed by MEP Purvis on that matter, that “Commissioner McCreevy is very keen on the 10% rule.”