Municipal authorities, such as housing agencies or state education authorities, that sell bonds and use the proceeds to make loans for projects or home purchases, opposed the rules, saying they would saddle them with unnecessary regulations.

A three-year phase-in period for the rules will give local officials plenty of time to prepare, and give the commission room to change the rules if needed, Schapiro said.

Republican Commissioners Kathleen Casey and Troy Paredes raised objections to the rules requiring reviews of ABS assets by issuers or designated third parties.

"It is not clear to me what is gained," said Casey, who cited the "reasonable assurance" standard for assuring the accuracy of disclosures in voting against the measure.

MBIA, in a lawsuit against Bank of America Corp., said its reviews found that 91 percent of defaulted or delinquent loans packaged into a set of bonds by the bank's Countrywide Financial Corp. unit had "material discrepancies from underwriting guidelines," such as borrower incomes, credit scores or debt-to- income ratios.

"I believe that a minimum standard better serves investors' interest," Schapiro said. "Investors need to know that issuers are taking steps to check that the assets in the pool are what the prospectus represents them to be."


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