Popping the Corker
In this report, we provide key points in S. 1217, the final bill introduced yesterday by Sens. Corker, Warner and a formidable group of bipartisan cosponsors. These do not include Johnson or Crapo, but the measure front-runs the debate and, thus, will have considerable influence in it. The most substantive revisions from the earlier draft stiffen the capital requirements for the RMBS guarantors, perhaps to the point at which none will want or be able to play. The bill also opens up first-loss coverage not just to MIs, but also an array of other credit-risk providers, assuming they are willing to abide by MI-like rules. As we read the draft, it continues to put the USG in a second-loss position, threatening access to the TBA market for FMIC-guaranteed loans and, thus, perhaps sharply reducing demand for them.
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