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March 24, 2025
Cadwalader partner Jed Miller spoke with Green Street about how banks are continuing to explore capital-relief trades as they wait for clarity on a final update to the Basel 3 rules. The article, "More CRT Planned Amid Basel Wait," was published in Green Street's Asset-Backed Alert newsletter on March 21.
As banks wait to see how the Trump administration will handle the Basel 3 Endgame plan that was proposed in 2023, issuance of notes transferring risk from loans that banks hold on their balance sheets is running at roughly the same level as during the first quarter of 2024. A reproposal by the administration could result in a reduction of need for these types of trades, but many experts think they will remain attractive to banks.
“Many of the trades that have been done by large banks to date were not necessarily executed because those banks were capital constrained,” said Jed. Instead, they were intended as a proof of concept or to optimize regulatory capital.
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