The Road to Securitization

Posted by & filed under CFPB, Federal Housing Finance Agency, Rating agencies.

Miguel Segoviano et al. of the IMF released a helpful Working Paper, Securitization:  Lessons Learned and the Road Ahead (also on SSRN). It opens, Like most forms of financial innovation, there are cost and benefits associated with the securitization of cash flows. From a conceptual perspective, a sound and efficient market for securitization can be… Read more »

Balancing Consumer Protection and Access to Credit

Posted by & filed under CFPB, Federal Housing Finance Agency, Rating agencies, Regulation.

S&P posted U.S. RMBS Roundtable: Originators, Aggregators, and Counsel Discuss New Qualified Mortgage Rules. In summarizing the roundtable, S&P notes that The ability-to-repay rule, ostensibly to prevent defaults and another housing crisis, is still very much open to interpretation. To that end, Standard & Poor’s Ratings Services recently held a private roundtable with several market… Read more »

S&P on Rating Mortgage-Backed Securities Before The Crisis

Posted by & filed under Rating agencies.

S&P has posted The Role of Credit Rating Agencies in The Financial System, remarks by its president at the United Nations. The remarks reflect S&P’s narrative of the events leading up to the Subprime Crisis. This narrative is, unsurprisingly, self-serving but revealing nonetheless. We, like others, did not anticipate the U.S. housing downturn, which led… Read more »

Reiss on Atlantic Yards Litigation

Posted by & filed under Equity, Rating agencies.

The New York Daily News quoted me in a story, Bruce Ratner Will Have to Pay His Opponents’ Legal Bills: Judge, about the litigation over the construction of the Barclays Center and the other buildings in the Atlantic Yards project. It reads in part, Develop Don’t Destroy Brooklyn and Prospect Heights Neighborhood Development Council will… Read more »

Replacing Rating Agencies

Posted by & filed under Rating agencies.

Although rating agencies have been the subject of much criticism, including much from yours truly, (here for instance) there is no clearly superior replacement for the existing business model.  Even worse, there is not even much theoretical work on alternatives. Thus, it is exciting to see that Becker and Opp have posted a new paper,… Read more »

S&P Seeking Dismissal of Suit

Posted by & filed under Rating agencies, Regulation.

In the wake of the 2008 Financial Crisis, Standard & Poor’s (S&P) has been accused of inflating its ratings to win business during the boom in mortgage investments. The Justice Department brought civil fraud charges accusing S.& P of knowingly giving complex packages of mortgages higher ratings than they deserved, stoking investor demand for the securities and… Read more »