We have been laying out since the post-crisis framework fell into place that much in it combines with mortgage-targeted reforms to make a historic cornerstone of U.S. banking a go-broke business. With Capital One now exiting the sector, there can be little doubt that what some have called a temporary adjustment is a structural realignment. By the time Congress gets around to the conservatorships, efforts to reduce the government’s role could be for naught because non-banks need GSEs and mortgage finance increasingly has to have non-banks if there are to be any originations.
The full report is available to subscription clients. To find out how you can sign up for the service, click here.