On Wednesday, we assessed a Brookings paper making CRT recommendations we thought ill-advised.  Today, we turn to a thorough assessment of substantive options from the Urban Institute.  Looking ahead to Treasury/FHFA administrative reorganization of the GSEs, the Urban Institute paper posits new private-sector CRTs, products critical to any successful privatization of key housing-finance functions.  However, there are significant technical obstacles to the products proposed in this paper.  We continue to think a simpler model relying on new-age covered bonds will work better than re-engineering complex CRTs for which global demand will always be limited.

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