Continuing our analysis of GSE-reform proposals, we turn today to one from Moelis & Company LLC. It is a strong defense of recap and release reportedly funded by Blackstone Group LP and Paulson & Co. As such, it is backed by considerable political capital that may even include the powerful firepower possessed by community bankers (which today told the Banker that they support this plan despite its significant differences from their own). Nonetheless, we doubt this plan will sway opponents of recap and release, especially those with an understanding of large-bank capital requirements and the risk of the remaining PSPA commitments and the “effective” guarantee that lies behind it.
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