As reported yesterday, the SEC is getting ready to propose new rules for asset backed securities that will require standardized loan level detail on all assets packaged in the security or derivative. While the sell side of the financial services industry will no doubt scream bloody murder about more regulation, the fact of the matter is that all of the key information from descriptions of the assets to credit scores of the borrowers are typically captured as part of the loan origination process and can easily be converted to standard XML and carried along for the life of the loan along with new loan servicing information as it accumulates. Moreover, anyone who has an ECM system which can consume XBRL, can easily set up the disclosure system to update the SEC systems that are being converted to XBRL
Given the success of the banking lobbyists in killing or watering down every significant regulatory reform that has been introduced in the past two years, I am not particularly confident that this reform will ever become law, but if it does, the loan origination systems of every major bank will likely require no more than a few tweaks to send the data to the warehouse
