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QUESTION

Q 52: The agencies solicit comment on the distinction between controlled and non-controlled early amortization provisions and on the extent to which banks use controlled early amortization provisions. The agencies also invite comment on the proposed definition of a controlled early amortization provision, including in particular the 18-month period set forth above.

Q 53: The agencies seek comment on the

appropriateness of the 4.5 percent excess spread trapping point and on other types and levels of early amortization triggers used in securitizations of revolving retail exposures that should be considered by the agencies.

Q 54: The agencies seek comment on and supporting empirical analysis of the appropriateness of a more simple alternative approach that would impose at all times a flat CCF on the entire investors’ interest of a revolving securitization with a controlled

early amortization provision, and on what an appropriate level of such a CCF would be

(for example, 10 or 20 percent).

CFG/RBS Comments

We use an 18 month amortization period in outstanding revolving securitizations, in line with the NPR proposals

The 4.5% is in line with the proposed FSA treatment. Where securitization requires the excess spread be trapped, this point is set by the rating agencies rather than the regulator.

Our methodology is still under development so we are unable to comment on the proposals or the appropriate CCF.

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