New Trade Group, Same Old Problem?
March 28, 2013
Longstanding tensions within the American Securitization Forum (ASF) boiled over in March, when most of its board of directors resigned over a dispute with executive director Tom Deutsch over its management, putting the trade group’s future in question.
Many of the resigning firms subsequently formed a new, rival association, the Structured Finance Industry Group (SFIG).
But while free from conflicts with Deutsch, the SFIG will still have to face some of the same issues that have bedeviled the ASF — whether a trade group that lobbies government can suitably represent investors as well as issuers and underwriters.
The SFIG announced its formation on March 14, with PNC executive Reggie Imamura as Board Chairman. In a press release, the group said it “will provide an inclusive network for structured finance and securitization professionals to collaborate.”
In short, your typical trade association.
Many ASF members had issues with corporate governance, feeling that too much power was concentrated in Deutsch’s hands.
When the ASF split from the Securities Industry and Financial Markets Association (SIFMA) three years ago, members had agreed to a governance framework that they believed would only be temporary, according to a former ASF member.
An ASF spokesman declined to comment for this story beyond a statement Deutsch made immediately after the departures, which made no mention of the exodus. An SFIG spokesman did not comment by press time.
While people representing varying interests were at odds with the ASF’s management, it is the investor members who have repeatedly chaffed at the organization’s stance on particular issues — from mortgage modification programs to the robo-signing settlement — which they felt was skewed towards the interests of issuer and banker members.
Indeed, PIMCO bailed from the ASF in early 2012 over dissatisaction with the robo-signing settlement, which was meant to address servicing abuses.
The question is whether these conflicts arose from a style of corporate governance that critics associate with Deutsch or whether they are inherent to any organization that in the young group’s own words “intends to represent all sectors of the structured finance and securitization market, including accounting firms, investors, issuers, law firms, rating agencies, securities dealers, servicers, technology firms, and trustees.”
As of press time, it wasn’t clear that SFIG’s had any investor members.
While a few the 21 firms mentioned as participating in SFIG’s formation have some connective tissue in common with buysiders — PNC Bank, for instance, owns a quarter of BlackRock — there were no pure buyside names on the list.
One former ASF member said he believed a trade organization could encompass the entire structured finance industry. It would simply have to adjust to not always having a unified voice in its lobbying efforts.
“Maybe we can’t express an opinion as an organization, [or] there may be two [opinions],” he said, adding that this worked early in the ASF’s life, when it was still under SIFMA.