Securitization Skulks in the Shadows
We have reviewed the new, final framework for shadow banking the G-20 will endorse later this week. Global banking, securities and insurance regulators have lightened their touch on asset securitization, although credit insurance (e.g., MI, CDS) are again cited as worrisome products requiring lots more regulation. From a GSE perspective, the most significant aspect of the new standards is not in the shadows, but rather in the latest round of rules for securities-financing transactions (SFTs) and repos, rules that will exacerbate the shortfall of eligible collateral and, thus, make Ginnie paper all the more critical in the capital markets.
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