Obama to require lenders to keep 5 percent of credit risk

WASHINGTON (Reuters) - The Obama administration plans to require original lenders to retain five percent of the credit risk of loans that are later securitized as part of its proposal to revamp financial regulations, a Treasury spokesman said on Monday.

The plan, to be unveiled on Wednesday, would also prohibit those lenders from directly or indirectly hedging the risk they are required retain.

The administration plans to propose changes to generally accepted accounting principles (GAAP) to eliminate "gain on sale" accounting that would require lenders to more accurately reflect income over time.

The spokesman also said the plan would require credit rating agencies to differentiate between structured products and corporate bonds and address conflicts of interest.

And it would give the Securities and Exchange Commission additional powers to require issuers of asset-backed securities to disclose loan level data.

(Reporting by Corbett B. Daly, Editing by Diane Craft)