Having completed our detour into regulations and interpretations other than re-proposed Rule 18f-4, this post returns to considering possible justifications for carving out “unfunded commitment agreements” from the proposed Value at Risk limitations of Rule 18f-4. We have previously explained why the first two justification identified in the proposing release are ill-founded, which leaves only the following argument for a carveout:
We believe this is true of some, but not all, commitments. To explain why, we begin with the most important element of the proposed definition of “unfunded commitment agreement:” that it is a commitment to the company receiving the loan or other investment.