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News Release 2008-93 | July 31, 2008

Joint Forum Release of Credit Risk Transfer Paper

WASHINGTON—The Joint Forum today released its paper entitled Credit Risk Transfer – Developments from 2005 to 2007. "This paper is contributing significantly to the understanding of the causes of the credit market turmoil," said John C. Dugan, Comptroller of the Currency and Chairman of the Joint Forum. "Particularly relevant is the report's focus on two financial instruments that have been used widely to transfer credit risk: collateralized debt obligations referencing ABS (ABS CDOs) and collateralized loan obligations (CLOs).

"While it is critical to understand the causes of the market turmoil, market participants must also focus on actions to take to increase the resilience of markets and institutions going forward," Mr. Dugan said. "To that end, this report provides a number of new recommendations applicable to all market participants that enhance the earlier recommendations of the Joint Forum's 2005 Credit Risk Transfer paper. I urge all significant participants in these markets to implement these recommendations. In 2009, the Joint Forum will survey these participants to assess the extent to which they have done so."

This paper was developed in response to a request from the Financial Stability Forum (FSF) in March 2007 to consider the extent to which the Joint Forum's March 2005 paper Credit Risk Transfer (CRT) required updating as a result of the continued growth and rapid innovation in the CRT markets. While development of the paper was underway well ahead of the market disruption that began in the summer of 2007, it formed the centerpiece of the Joint Forum's submission to the FSF in support of its work on the market turmoil. In fact, the paper was prepared on an accelerated schedule so that it could be presented at the March 2008 meeting of the FSF.

The paper is available on the Websites of the Bank for International Settlements (, International Organization of Securities Commissions (, and the International Association of Insurance Supervisors (

The Joint Forum was established in 1996 under the aegis of the Basel Committee on Banking Supervision, IOSCO, and the IAIS to deal with issues common to the banking, securities and insurance sectors, including the supervision of financial conglomerates. Comptroller of the Currency John C. Dugan has been Chairman since September 2007.

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