--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
By Al Yoon
The American Securitization Forum, a major trade group for structured finance 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, who has led the organization focusing 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.
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 finalized 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, nor accept contract terms pushed by the ASF board, the people said.
It wasn't clear whether the ASF could survive the board's revolt, accompanied with a loss of dozens of members.
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 Financial Services Group Inc. ( 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.
The big accounting firms, Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLP and PricewaterhouseCoopers LLP, did not
immediately return calls seeking comment.
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 on Las Vegas, where headline acts by Jay Leno and the Blue Man Group performed at the events before the
financial crisis.
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 and Brendan Intindola contributed to this article.
Write to Al Yoon at albert.yoon@dowjones.com
(END) Dow Jones Newswires
03-04-131651ET
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