HardAssetsInvestor

Mike Norman, Hard Assets Investor (Norman): Hello, and welcome to HardAssetsInvestor.com. I'm Mike Norman, your host. My guest today is Joseph Fichera, CEO of Saber Partners. Joseph, thank you very much for coming back on the show.

Joseph Fichera, CEO, Saber Partners (Fichera): Happy to be here.

Norman: Let’s talk about 2013. I know you're very much involved in the regulatory and landscape changes that are happening there. What do you see? What do you envision for this year, the rollout, in terms of regulatory changes, if any, that could impact the markets?

Fichera: Well obviously, there's the impact of Basel III, and what happens there, in terms of the banks, is a big concern of the major lenders. And we’ve seen a shift, in terms of activity and lending in Japanese banks, trying to do more as the European banks have pulled back. But the securitization market is probably where there is tremendous amount of uncertainty and some major rules that have already been put out for comment. There have been major responses that were sent in, defining what a qualified residential mortgage is, risk retention, what those rules would be for that market.

That market has been moribund since the credit crisis. And while we’ve talked about uncertainty related to the fiscal situation of taxes and spending, and we were focused on the Volcker Rule and proprietary trading, no doubt that’s important, there are all these other regulatory rules that are coming through that will have a major effect, as to whether that market is going to come back, and how it will come back.

Norman: Right. I had Bart Chilton here not too long ago. He’s a CFTC commissioner. And he talked about the comment period that the CFTC had regarding these rule changes. And basically, he said something like, for every comment from the public regarding these rule changes, you had like 80 or 100 comments from the industry. So it’s really been tilted to one side, which would suggest maybe that the rule changes are not going to be that dramatic; that the industry again—and I'm talking about Wall Street—has really been very aggressive in there, in crafting these rules, obviously to protect their own interests.

Fichera: There is no doubt of the industry’s influence. And there is no doubt that the regulators got some things wrong or created something. And there is confusion in that process. But the president did get re-elected. The administration is basically intact. There are going to be some new personalities in the various key posts. But Elizabeth Warren being on the Banking Committee—she’s going to be an advocate in form. We still have the Consumer Protection Agency that has just started. It was pushed back by Congress in terms of its funding. But it is moving forward. So there's a certain amount of momentum there.

No doubt the industry, with some justification, is concerned about overreach. But things are going to be different. Dodd-Frank will not be repealed. It’s not going away. So we just want to know how will it be implemented, and will the cure be worse than the disease? Obviously, parts of the industry are concerned. But we’re going to see things different.