--American Securitization Forum board members in revolt, "concern about the governance of the organization"
--Board felt powerless to negotiate with executive director; Goldman, J.P. Morgan, Bank of America leave ASF
--Future of the forum, known for lobbying and large conferences, is unclear
(Updates with details about more firms leaving the ASF in 12th and 13th paragraphs.)
By Al Yoon
The American Securitization Forum, a major structured-finance trade group that counts the world's largest banks and
law firms among its hundreds of members, is in crisis after a mass exodus from its board sparked by disagreements over
the ASF executive director's pay and power.
About 20 board members resigned Friday, taking their organizations out the door with them, following similar
departures by several others in recent weeks, according to people close to former board members.
The turmoil comes as the board members became increasingly troubled by their lack of control over ASF Executive
Director Tom Deutsch. He has led the organization, which focuses on mortgage and consumer asset finance, since it began
talks to separate from Wall Street's main trade group, the Securities Industry and Financial Markets Association, or
Sifma, in 2009.
Sources said a transitional corporate structure put in place to facilitate the ASF-SIFMA split prevented the board
from exerting its governance over Mr. Deutsch. The board was largely powerless to terminate him, leading directors to
resign in frustration.
The director and member exits also come about a year after the resignation of Vernon Wright, the ASF's chairman, who
had also criticized the organization's governance.
ASF directors formed a subgroup in early 2012 to speed the formal split of ASF from Sifma, and address transparency
issues in response to Mr. Wright's resignation. But the directors group couldn't make headway with Mr. Deutsch, despite
reaching agreements with Sifma that would have secured the separation of the two trade organizations, the people said.
A final agreement over ASF's break from Sifma was reached late last year, but hasn't been signed because of internal
disagreements over a lack of transparency into the ASF board and Mr. Deutsch's pay.
ASF directors complained that they had no control over the organization that was operating under an interim
corporation--ASF Inc.--set up to facilitate the Sifma separation. Mr. Deutsch was the sole member of ASF Inc., and
wouldn't cede this power, recognize the board's oversight or even the right to fire him, the people said.
It wasn't clear whether the ASF could survive the board's revolt, accompanied with a loss of dozens of dues-paying
In additional to global banks, big broker-dealers and nationally recognized law firms, ASF members also include the
Big Four accounting firms, credit-ratings companies and asset managers.
Wells Fargo & Co. ( WFC ), Bank of America Corp. ( BAC ) and PNC Financial Services Group ( PNC ) on Monday confirmed their
resignations from the board and membership in the ASF. Others resigning from both include Deutsche Bank (DB, DBK.XE),
J.P. Morgan Chase & Co. (JPM) law firm Cadwalader, Wickersham & Taft and broker-dealer Amherst Securities Group.
A PNC spokeswoman said the bank's departure was "over concern about the governance of the organization." Goldman Sachs
Group Inc. ( GS ) said it resigned its ASF membership, and declined to explain the decision. Discover Financial Services
(DFS) and Moody's Investors Service resigned from the forum and the board, spokesmen for the companies said. They
declined to discuss the companies' reasoning.
Among the big accounting firms, Ernst & Young LLP said it quit the ASF, while Deloitte & Touche LLP, KPMG LLP and
PricewaterhouseCoopers LLP did not return calls.
Elsewhere, GM Financial, General Motors Co.'s ( GM ) financing arm and one of the largest issuers of asset-backed
securities, has dropped its ASF membership, a spokeswoman said. Bond insurer MBIA ( MBI ) resigned from the board but is
still a member of the forum, an MBIA spokesman said.
Mr. Deutsch said in a statement: "The separation and related negotiations from Sifma have frankly been messier and
more difficult than anyone expected." A spokesman for Mr. Deutsch didn't respond to an email or phone message seeking
comment about the ASF board.
The internal strife contrasts with the organization's many trade events and high-profile regulatory advocacy. The
group is known for active lobbying in Washington, where Mr. Deutsch has testified before Congress on matters affecting
securitizations, of which there are nearly $10 trillion outstanding.
Annual ASF conferences have drawn attention for their lavish events held at upscale resorts, including the Venetian
hotel and casino in Las Vegas, where headline acts by Jay Leno and the Blue Man Group performed at the events before the
The ASF faced increased scrutiny in 2009 as the crisis intensified. New asset securitizations stopped or slowed down
dramatically and defaults on existing ABS bonds were roiling financial markets.
The ASF moved its 2010 annual conference to the more staid Washington, D.C., area and Orlando in 2011, but returned to
Las Vegas in 2012. It drew about 5,500 people to its 2013 conference at the Aria Resort & Casino in January, which
focused on the rapid recovery for securitization of auto loans and other consumer assets, and ongoing efforts to
revitalize private-mortgage securitizations.
According to an overview of the organization published on the ASF website, 2012 membership fees ranged from $75,000
for a "Large Integrated Financial Institution" to $2,500 for the "smallest" investor, issuer or subscriber. The smallest
investor is defined by the ASF as one with less than $500 million in assets under management. For a "Large Broker
Dealer," the cost is $50,000.
One of the group's next events--ASF Policy Summit Navigating Dodd-Frank Implementation--is scheduled for May 16 in New
York at the Grand Hyatt. The hotel confirmed the event remains scheduled as of Monday.
--Liz Moyer, Andrew R. Johnson, Alan Zibel and Brendan Intindola contributed to this article.
Write to Al Yoon at email@example.com
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